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MEALEY’S TM TM Fracking Report May 2014 Volume 1, Issue #1 5th Circuit Panel Vacates Summary Judgment, Remands To Decide Intervenor’s Status NEW ORLEANS — A unanimous Fifth Circuit U.S. Court of Appeals panel ruled May 7 that an Eastern District of Texas judge lacked jurisdiction over an assignment of rights dispute among natural gas well operating companies because a nondiverse intervenor destroyed subject-matter jurisdiction; the panel vacated a summary judgment order and remanded the lawsuit with instructions to determine if the intervenor is an indispensable party. SEE PAGE 4. Wyoming Supreme Court Defines Trade Secrets, Remands Fracking Fluid Disclosure Case CHEYENNE, Wyo. — The Wyoming Supreme Court issued a unanimous opinion March 12 vacating a lower ruling that the components of hydraulic fracturing fluid are exempt from disclosure as trade secrets and instructing the lower court to apply the federal definition of trade secrets to review a Wyoming Oil & Gas Conservation Commission order denying requests for disclosure of the chemicals in the fluid; the mandate issued March 28. SEE PAGE 5. Order To Produce Seismic Data Affirmed; Water Well Suit Fact Discovery Ends May 23 SCRANTON, Pa. — Phase 1 fact discovery in a lawsuit in the U.S. District Court for the Middle District of Pennsylvania alleging contamination of residential water wells with hydraulic fracturing chemicals closes May 23; a motion by the natural gas extraction company defendants for reconsideration of an October 2013 order to produce seismic data and open hole logs was denied in January. SEE PAGE 7. Louisiana Appeals Panel Rules Plaintiffs Lack Standing To Seek Restoration Damages LAKE CHARLES, La. — A unanimous Third Circuit Louisiana Court of Appeal panel on May 7 affirmed summary judgment against surface estate owners seeking damages from oil and natural gas operators for allegedly failing to restore the surface estate; the panel applied the subsequent purchaser doctrine and concluded that the plaintiffs lack standing to seek damages for alleged injuries before they purchased the subject land. SEE PAGE 10. Legacy Oil Pollution Claims Dismissed Without Prejudice In Louisiana Federal Court NEW ORLEANS — Defense motions to dismiss were granted in part on April 22 with leave to amend in a well field legacy contamination lawsuit pursued by landowners in the U.S. District Court for the Eastern District of Louisiana. SEE PAGE 12. Oklahoma Class Plaintiffs Appeal Dismissal Of Claims For Waste Hauling Pollution DENVER — Class action representatives of an Oklahoma action alleging fly ash and produced water contamination filed an appellant brief April 21 in the 10th Circuit U.S. Court of Appeals seeking reversal of an order denying remand under the local controversy exception to the Class Action Fairness Act of 2005 or, alternatively, vacating summary judgment for defendants for failing to state a claim. SEE PAGE 15. Texas Supreme Court Remands Attorney Fee Award Dispute Arising From Royalty Suit AUSTIN, Texas — The Supreme Court of Texas issued a per curiam opinion on April 25 remanding an attorney fee dispute with instructions for the trial court to develop a record sufficient to calculate attorney fees with the lodestar method; the disputed attorney fees are from a lawsuit to enforce an assignment of working interests in oil and natural gas producing wells. SEE PAGE 18. Natural Gas Operator Held Liable To Indemnify Driller For Contamination Litigation COLUMBUS, Ohio — A natural gas operating company sued by a drilling company with which it contracted to spud wells in West Virginia is liable under the drilling contract to reimburse settlement and litigation costs for a related well-water contamination lawsuit naming both companies as defendants, the presiding U.S. District Court for the Southern District of Ohio judge ruled April 16. SEE PAGE 19.

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Download the inaugural issue of Mealey's Fracking Report, May 2014. To order, call 800.223.1940 or visit the LexisNexis Store at http://www.lexisnexis.com/store/catalog/booktemplate/productdetail.jsp?pageName=relatedProducts&skuId=sku9550313&catId=22&prodId=prod20560379&?utm_campaign=165769_Sample&utm_medium=social&utm_source=slideshare&utm_content=052814_0pct_AB&utm_term=print MORE > Known for extensive asbestos and toxic tort litigation coverage, the legal news journalists from Mealey Publications announced this new Report to follow the federal state and local litigation involving hydraulic fracturing. The report also covers federal and state regulatory and legislative developments, as well as rulings by administrative agencies tasked with enforcing laws that impact hydraulic fracturing. The newsletter will report on civil tort actions by property owners, including causes of actions for nuisance, trespass, negligence and strict liability; causation disputes regarding contamination of land and water supplies, noise and air pollution, damages caused by vibrations; personal injury lawsuits; citizen suits; government enforcement actions, including issues of land use, zoning and preemption; challenges to government enforcement actions, laws and regulations, including freedom of information and Fifth Amendment takings claims; oil and gas lease disputes; land use and property rights disputes, including quiet title actions and easement disputes; contract disputes; and insurance coverage claims.

Transcript of Mealey's Fracking-Report-sample-issue-may-2014

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MEALEY’S TMTM

Fracking ReportMay 2014 Volume 1, Issue #1

5th Circuit Panel Vacates Summary Judgment, Remands To Decide Intervenor’s StatusNEW ORLEANS — A unanimous Fifth Circuit U.S. Court of Appeals panel ruled May 7 that an Eastern Districtof Texas judge lacked jurisdiction over an assignment of rights dispute among natural gas well operating companiesbecause a nondiverse intervenor destroyed subject-matter jurisdiction; the panel vacated a summary judgment orderand remanded the lawsuit with instructions to determine if the intervenor is an indispensable party. SEE PAGE 4.

Wyoming Supreme Court Defines Trade Secrets, Remands Fracking Fluid Disclosure CaseCHEYENNE, Wyo. — The Wyoming Supreme Court issued a unanimous opinion March 12 vacating a lower rulingthat the components of hydraulic fracturing fluid are exempt from disclosure as trade secrets and instructing the lowercourt to apply the federal definition of trade secrets to review a Wyoming Oil & Gas Conservation Commission orderdenying requests for disclosure of the chemicals in the fluid; the mandate issued March 28. SEE PAGE 5.

Order To Produce Seismic Data Affirmed; Water Well Suit Fact Discovery Ends May 23SCRANTON, Pa. — Phase 1 fact discovery in a lawsuit in the U.S. District Court for the Middle District ofPennsylvania alleging contamination of residential water wells with hydraulic fracturing chemicals closes May 23; amotion by the natural gas extraction company defendants for reconsideration of an October 2013 order to produceseismic data and open hole logs was denied in January. SEE PAGE 7.

Louisiana Appeals Panel Rules Plaintiffs Lack Standing To Seek Restoration DamagesLAKE CHARLES, La. — A unanimous Third Circuit Louisiana Court of Appeal panel on May 7 affirmed summaryjudgment against surface estate owners seeking damages from oil and natural gas operators for allegedly failing to restorethe surface estate; the panel applied the subsequent purchaser doctrine and concluded that the plaintiffs lack standingto seek damages for alleged injuries before they purchased the subject land. SEE PAGE 10.

Legacy Oil Pollution Claims Dismissed Without Prejudice In Louisiana Federal CourtNEW ORLEANS — Defense motions to dismiss were granted in part on April 22 with leave to amend in a wellfield legacy contamination lawsuit pursued by landowners in the U.S. District Court for the Eastern Districtof Louisiana. SEE PAGE 12.

Oklahoma Class Plaintiffs Appeal Dismissal Of Claims For Waste Hauling PollutionDENVER — Class action representatives of an Oklahoma action alleging fly ash and produced water contaminationfiled an appellant brief April 21 in the 10th Circuit U.S. Court of Appeals seeking reversal of an order denying remandunder the local controversy exception to the Class Action Fairness Act of 2005 or, alternatively, vacating summaryjudgment for defendants for failing to state a claim. SEE PAGE 15.

Texas Supreme Court Remands Attorney Fee Award Dispute Arising From Royalty SuitAUSTIN, Texas — The Supreme Court of Texas issued a per curiam opinion on April 25 remanding an attorney feedispute with instructions for the trial court to develop a record sufficient to calculate attorney fees with the lodestarmethod; the disputed attorney fees are from a lawsuit to enforce an assignment of working interests in oil and natural gasproducing wells. SEE PAGE 18.

Natural Gas Operator Held Liable To Indemnify Driller For Contamination LitigationCOLUMBUS, Ohio — A natural gas operating company sued by a drilling company with which it contracted tospud wells in West Virginia is liable under the drilling contract to reimburse settlement and litigation costs for a relatedwell-water contamination lawsuit naming both companies as defendants, the presiding U.S. District Court for theSouthern District of Ohio judge ruled April 16. SEE PAGE 19.

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MEALEY’STMTM

Fracking ReportMay 2014 Volume 1, Issue #1

Cases in this Issue Page

Chesapeake Louisiana v. Buffco Production Inc., et al., No. 13-40458,5th Cir. ........................................................................................................... 4

Powder River Basin Resource Council, et al. v. Wyoming Oil & GasConservation Commission, et al., No. 13-120, Wyo. Sup. ........................... 5

Susan Berish, et al. v. Southwestern Energy Production Co., et al.,No. 10-1981, M.D. Pa........................................................................................ 7

Lisa Parr, et al. v. Aruba Petroleum Inc., No. 11-1650, County Courtat Law No. 5 of Dallas County, Texas ........................................................... 9

Carlos Boone, et uxor v. ConocoPhillips Co., et al., No. 13-1106, La. App.,3rd Cir. ........................................................................................................... 10

Catherine P. Alford, et al. v. Chevron USA Inc., et al., No. 13-5457(consolidated), E.D. La........................................................................................ 12

William Reece, et al. v. AES Corp., et al., No. 14-7010, 10th Cir. .......................... 15Larry T. Long, et al. v. Robert M. Griffin, et al., No. 11-1021, Texas Sup.............. 18Warren Drilling Inc. v. Equitable Production Co., No. 12-425, S.D. Ohio ............. 19Thomas A. Neuhard, et uxor v. Range Resources-Appalachia, No. 11-1989,

M.D. Pa. ......................................................................................................... 21Rugh A. Mason, et uxor v. Range Resources-Appalachia, et al., No. 12-369,

W.D. Pa............................................................................................................... 22Edward E. Kamuck v. Shell Energy Holdings, et al., No. 11-1425, M.D. Pa........... 24Joe Rath, et al. v. BHP Billiton Petroleum (Arkansas) Inc., et al., No. 13-602,

E.D. Ark. ............................................................................................................. 25Daniel W. Nicholson v. XTO / Exxon Energy Inc., No. 13-899, N.D. Texas ........ 26Sheila Russell, et al. v. Chesapeake Appalachia, et al., No. 14-148, M.D. Pa............ 28Bobbie Hill, et al. v. Southwestern Energy Co., No. 12-500, E.D. Ark.................... 30Mary L. Vermillion, et al. v. Mora County, N.M., et al., No. 13-1095, D. N.M.... 31Columbia Gas Transmission v. Gary Galloway, No. 14-77, E.D. Ky. ...................... 33Thomas Chaffee, et al. v. Talisman Energy USA Inc, et al., No. 14-690,

M.D. Pa............................................................................................................... 33Tennessee Gas Pipeline Co. v. Permanent Easements, et al., No. 14-1821,

3rd Cir. ................................................................................................................ 35Dr. Alfonso Rodriguez, M.D., v. Michael L. Krancer, et al., No. 12-1458,

M.D. Pa............................................................................................................... 36

Published document is available at the end of the report. For other availabledocuments from cases reported on in this issue, visit www.mealeysonline.com or call1-800-MEALEYS.

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In this Issue

Assignment Of Rights5th Circuit Panel Vacates SummaryJudgment, Remands To DecideIntervenor’s Status.......................................... page 4

Trade SecretsWyoming Supreme Court Defines TradeSecrets, Remands Fracking FluidDisclosure Case .............................................. page 5

Order To Produce Seismic Data Affirmed;Water Well Suit Fact Discovery EndsMay 23...............................................................page 7

VerdictTexas Jury Awards $2.9 Million To FamilyAlleging Harm From Natural GasFracturing ........................................................... page 9

Legacy DamagesLouisiana Appeals Panel Rules PlaintiffsLack Standing To Seek RestorationDamages....................................................... page 10

Legacy Oil Pollution Claims DismissedWithout Prejudice In LouisianaFederal Court ............................................... page 12

AppealOklahoma Class Plaintiffs AppealDismissal Of Claims ForWaste Hauling Pollution.............................. page 15

Texas Supreme Court Remands AttorneyFee Award Dispute Arising FromRoyalty Suit ................................................. page 18

Duty To DefendNatural Gas Operator Held Liable ToIndemnify Driller For ContaminationLitigation...................................................... page 19

Lease DisputePennsylvania Federal Judge Rules GasWell Activity Did Not Extend TermOf Lease....................................................... page 21

Pennsylvania Federal Judge DeniesSummary Judgment In NaturalGas Lease Dispute........................................ page 22

April Trial Stayed Pending DispositiveMotion Ruling In PennsylvaniaFederal Court ............................................... page 24

RoyaltiesMarch 2015 Royalty Trial Set InArkansas; Some Claims DismissedIn January Order.......................................... page 25

Wrongful DeathGas Well Operator Objects To OrderDenying Dismissal In Texas FederalCourt ........................................................... page 26

Personal InjuryGas Well Operators Seek Order ToSupport Claims Before SummaryJudgment Discovery ..................................... page 28

Waste DisposalDiscovery Dispute Reported By OilfieldWell Operators In Arkansas InjectionSuit .............................................................. page 30

Ordinance ChallengeNew Mexico Property Owners AmendComplaint In Suit ChallengingFracking Ban................................................ page 31

PipelineGas Pipeline Operator Seeks DeclaratoryJudgment, Removal Of Bull FromEasement...................................................... page 33

Property DamagePennsylvania Plaintiffs Sue Well, PipelineOperators For Loss Of Property Value............page 33

Natural Gas Pipeline Operator Appeals$78,000 Award In PennsylvaniaEasement Suit .............................................. page 35

MEALEY’S Fracking Report Vol. 1, #1 May 2014

Cite as Mealey’s Fracking Report, Vol. 1, Iss. 1 (5/14) at p.___, sec.___. 3

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News

5th Circuit Panel VacatesSummary Judgment, RemandsTo Decide Intervenor’s StatusNEW ORLEANS — A unanimous Fifth Circuit U.S.Court of Appeals panel ruled May 7 that an EasternDistrict of Texas judge lacked jurisdiction over anassignment of rights dispute among natural gas welloperating companies because a nondiverse intervenordestroyed subject-matter jurisdiction; the panel vacateda summary judgment order and remanded the lawsuitwith instructions to determine if the intervenor is anindispensable party (Chesapeake Louisiana v. BuffcoProduction Inc., et al., No. 13-40458, 5th Cir.).

(Opinion in Section D. Document #94-140513-013Z.)

Chesapeake Louisiana filed state law claims against Free-man Capital, Buffco Production Inc., Twin Resources,Wayne Freeman and Freeman Resources to recoverfor alleged overpayment of an assignment of deep rightsin the Geisler Unit property in Harrison County, Texas(No. 10-359, E.D. Texas). Chesapeake Louisianaclaimed federal jurisdiction because the defendants arecitizens of Texas and it is a citizen of Oklahoma.

2008 AgreementThe alleged overpayment involved a transaction arisingfrom a July 2008 agreement between Chesapeake Loui-siana and Buffco. Chesapeake Louisiana agreed to payapproximately $232 million to acquire Buffco’s workinginterests in the deep rights in the Geisler, Bowen, Hembyand Yow units for three years. The letter contains anon-operator clause through which Chesapeake Louisi-ana agrees to make the same offer to non-operating work-ing interests in the same properties. Freeman, FreemanCapital and Harleton Oil & Gas Inc. are the owners ofthe non-operating working interests.

Based on faulty information from a third party, Chesa-peake Louisiana believed Buffco and Freeman each

owned 50 percent interests in the Geisler unit deeprights, for which it paid each of them $6.8 million.The parties agree the proper allocation of the workinginterests in the Geisler unit is Buffco, 25 percent; Free-man, 22 percent, Freeman Capital, 3 percent; andHarleton Oil 50 percent. Therefore, by its paymentto Buffco and Freeman, Chesapeake Louisiana ac-quired only 47 percent of the working interests in theGeisler Unit.

Buffco, Freeman and Freeman Capital alleged in coun-terclaims that Chesapeake Louisiana was required to pur-chase their interests in the Bowen, Hemby and Yowproduction units.

Harleton Oil intervened and alleged claims againstChesapeake Louisiana, Freeman and Buffco. HarletonOil sought 50 percent of the $13.6 million paid toBuffco and Freeman. In exchange, Harleton Oilwould transfer its interest in the Geisler Unit to Che-sapeake Louisiana. Harleton alleged fraud claimsagainst Buffco for misrepresenting its Geisler Unitinterests to Chesapeake Louisiana.

Chesapeake Louisiana and Buffco settled their dispute.Subsequently, Judge Rodney Gilstrap granted sum-mary judgment in favor of Chesapeake Louisiana andHarleton Oil with respect to the Geisler Unit and infavor of Chesapeake Louisiana with respect to theBowen, Hemby and Yow units.

Summary JudgmentFollowing the entry of summary judgment, Freemanand Freeman Capital filed a joint motion to dismissfor lack of subject matter jurisdiction on the groundsthat Harleton Oil’s intervention destroyed diversityand its status as an indispensable party.

Judge Gilstrap concluded that Harleton Oil is adefendant-intervenor and denied the motion. In addi-tion, he ruled that an analysis of whether supplementaljurisdiction attached was unnecessary.

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Freeman, Freeman Capital, Buffco and Harleton Oilappealed.

Judges Patrick E. Higginbotham, W. Eugene Davisand Catharina Haynes heard the appeal and filed aper curiam opinion overturning the judgment in part.

‘‘As a court of limited jurisdiction, we must first satisfyourselves, independent of the district court’s determi-nation, that subject-matter jurisdiction exists over theparties’ claims related to the Geisler Unit,’’ according tothe panel.

‘‘As the parties correctly acknowledge, diversity jurisdic-tion existed over the suit prior to Harleton’s interven-tion; however, we must consider whether Harleton’sintervention destroyed diversity such that the districtcourt lacked jurisdiction over this matter.’’

First, the panel considered whether Harleton Oil isproperly recognized as a defendant-intervenor or aplaintiff-intervenor. ‘‘Here, the principal purpose ofthe suit and the primary and controlling matter in dis-pute suggest that Harleton is a plaintiff,’’ according tothe panel.

‘Plaintiff-Intervenor’‘‘Harleton’s proper alignment as a plaintiff-intervenoris further illustrated by the fact that the summaryjudgment order awarded relief to both Harleton andChesapeake, and both Harleton and Chesapeake areessentially aligned on appeal in seeking affirmance ofthe order. Further, Harleton affirmatively seeks to bealigned with Chesapeake in certain circumstances, suchas when it argues that its unjust enrichment claim istimely because its claim can relate back to the unjustenrichment claim filed by Chesapeake. Finally, whileHarleton brought a claim against Chesapeake, Buffco,and Freeman, no party has brought a claim againstHarleton, and Harleton has no potential for liability.Such a lack of potential for liability against a partysuggests that the party should be aligned as a plaintiff,’’according to the panel.

‘‘Having determined that Harleton should have beenaligned as a plaintiff-intervenor, we are bound to con-clude that the district court lacked diversity jurisdictionover the Geisler Unit claims.

‘‘Therefore, because there was no subject-matter juris-diction over the parties’ Geisler Unit claims following

Harleton’s intervention, we must vacate the grant ofsummary judgment with respect to the Geisler Unitclaims,’’ according to the panel. The panel remandedthe claims to permit the District Court to consider ifHarleton is an indispensable party and if the GeislerUnit-related claims should be dismissed.

With respect to Freeman and Freeman Capital’s coun-terclaims for interests in the Bowen, Hemby and Yowunits, the appellants aver that the counterclaims mustbe dismissed because subject matter jurisdiction islacking over the Geisler Unit claims, according to thepanel. Contrary to Freeman and Freeman Capital, anindependent basis for jurisdiction exists, according tothe panel.

‘We Affirm’

‘‘Harleton did not destroy diversity with respect to theseclaims because its claims were limited to the GeislerUnit,’’ according to the panel. ‘‘Further, the amountin controversy with respect to these claims exceeded$75,000. Therefore, because Freeman and FreemanCapital’s only challenge on appeal rests on their juris-dictional argument, we affirm the district court’s deci-sion concerning the Bowen, Hemby, and Yow Units.’’

Jesse R. Pierce and Brian Kevin Tully of Pierce &O’Neill in Houston represent Chesapeake Louisiana.Ben Taylor of Fulbright & Jaworski in Dallas and EricM. Albritton of Albritton Law in Longview, Texas,represent Freeman and Freeman Capital. Gene FrancisCreely II of Creely Law Firm in Houston representsBuffco. Gregory Dunne Smith of Ramey & Flock inTyler, Texas, represents Harleton Oil. �

Wyoming Supreme Court DefinesTrade Secrets, RemandsFracking Fluid Disclosure CaseCHEYENNE, Wyo. — The Wyoming Supreme Courtissued a unanimous opinion March 12 vacating a lowerruling that the components of hydraulic fracturingfluid are exempt from disclosure as trade secrets andinstructing the lower court to apply the federal defini-tion of trade secrets to review a Wyoming Oil & GasConservation Commission order denying requests fordisclosure of the chemicals in the fluid; the mandate

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issued March 28 (Powder River Basin Resource Council,et al. v. Wyoming Oil & Gas Conservation Commis-sion, et al., No. 13-120, Wyo. Sup.).

(Opinion in Section E. Document #94-140513-033Z. Mandate available. Document #94-140513-034R.)

Powder River Basin Resource Council, Wyoming Out-door Council, Earthworks and Center for EffectiveGovernment fka OMB Watch appealed the denial ofdisclosure of public records documenting the identityof chemicals used in hydraulic fracturing operationsin Wyoming from the Wyoming Oil & Gas Conserva-tion Commission (WOGCC) pursuant to the Wyom-ing Public Records Act (WPRA; Wyoming StatuteSubsection 16-4-204) and the Wyoming hydraulicfracturing disclosure rule.

7th Judicial DistrictAfter WOGCC denied the request for information, theenvironmental groups filed a petition for review underthe Wyoming Administrative Procedure Act (APA;Wyo. Statute Annotated section 16-3-114[c]) March23, 2012, in the Wyoming Seventh Judicial DistrictCourt, Natrona Co. The groups argue the supervisorarbitrarily refused to disclose information, and the deci-sions was an abuse of discretion and contrary to the law.

Halliburton Energy Services intervened, and the partiesstipulated to a record including 65 requests for tradesecret status approved by the WOGCC supervisor andposted on the commission website. The stipulatedrecord also included correspondence with respect tothe amendments by the commission to rules for exemp-ting certain information about hydraulic fracturing pro-ducts from disclosure as trade secrets.

The environmental groups and Halliburton filed cross-motions for summary judgment based on the stipulatedrecord. Judge Catherine E. Wilking conducted a hear-ing on the motions and granted summary judgmentMarch 21, 2013, rejecting the claims of the environ-mental groups.

The environmental groups appealed.

The Wyoming Supreme Court heard oral argumentsNov. 20 and issued the opinion March 12.

‘‘Proceedings to challenge denial of access to documentsclaimed to be public must follow procedures establishedby the WPRA, and those are not subject to reviewunder the Administrative Procedures Act [Sheaffer v.University of Wyoming, 2006 Wy 99, N 4, 139 P.3d468, 470 (Wyo. 2006)],’’ Justice Michael K. Daviswrote for the court.

‘Reverse And Remand’

‘‘We will therefore reverse and remand to the districtcourt. That court will have to decide whether to permitAppellants to amend their pleadings and file appro-priate documents to seek an order to show cause, orwhether to dismiss the case instead. In the latter event,Appellants may file new action with the appropriaterequest for an order to show cause as contemplatedby the WPRA. The district court is vested with broaddiscretion to determine whether to allow amendmentof pleadings, and we will not interfere with that dis-cretion. Voss v. Goodman, 2009 WY 40, N 14, 203P.3d 415, 420 (Wyo. 2009). Regardless of whichchoice the district court makes, on presentation of anadequate application for an order to show cause, thedistrict court should conduct appropriate proceedingsand determine whether the information Appellantsseek constitutes trade secrets or not, with the burdenof showing that they do upon the custodian (here theSupervisor) and any intervenors.’’

‘‘We understand the difficulty attendant upon holdingthese proceedings — they must be conducted in sucha manner that the information sought to be protectedis not disclosed until the court can determine whetherit is in fact subject to disclosure,’’ according to the court.‘‘This may require the use of in camera hearings, sealedfiles, or even closed hearings, tools that courts custo-marily use in cases involving trade secrets.’’

The court then turned to the standard to be appliedon remand to trade secret cases under the WPRA. ‘‘Thisis a general question of law which can be answeredwithout regard to the limited record we have, and itis in the interest of judicial economy to do so,’’ accord-ing to the court.

E M A I L T H E E D I T O R

email editor bill lowe [email protected]

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‘‘In order to maintain an open and accountable govern-ment, the Wyoming legislature enacted WPRA in1969. The Act provides a public right of access torecords of the state, its agencies, and local governmententities. Wyo. Stat. Ann. § 16-4-202(a) (LexisNexis2013),’’ according to the court.

‘Disclosure Generally’

‘‘The WPRA, like the FOIA [federal Freedom of In-formation Act], requires that disclosure generally pre-vail over secrecy.’’

‘‘Striking a delicate balance between the public’s rightof access to government records and the protectionof proprietary information, the WPRA contains severalexemptions from disclosure, which are set forth in§ § 16-4-203(b) & (d),’’ according to the court.

The exemption pertinent to the current case addressingtrade secrets, privileged information and confidentialcommercial, financial, geological or geological data isfound in 16-4-203(d)(v), according to the court. Thisexemption has never been subject to interpretation.

‘‘Having carefully contemplated the purpose of theWPRA, studied relevant case law, and considered com-peting arguments, we adopt the definition of tradesecrets articulated by federal courts under the FOIA.A trade secret in the public records context is ‘a secret,commercially viable plan, formula, process or devicethat is used for the making, preparing, compounding,or processing of trade commodities and that can besaid to be the end product of either innovation or sub-stantial effort [Anderson v. Department of Health &Human Services, 907 F.2d 936, 943-44 (10th Cir.)],’ ’’according to the court. ‘‘This ‘definition requires thatthere be a direct relationship between the trade secretand the productive process.’ Id.’’

‘‘We are left with the question of whether individualingredients of hydraulic fracturing formulae can consti-tute trade secrets under the definition we adopt. Wecannot resolve that issue in this appeal, unfortunately.’’

‘Independently Resolve’

‘‘The district court must independently resolve this dis-pute based on the credibility of the witnesses and per-suasiveness of the evidence presented by each party,’’according to the court.

Justices Marilyn S. Kite, William U. Hill, Barton Voigtand E. James Burke joined in the opinion.

Shannon Rose Anderson of Powder River Basin ResourceCouncil in Sheridan, Wyo., and Timothy J. Preso, LauraD. Beaton and Katherine Kirklin O’Brien of Earth-justice in Bozeman, Mont., represent the appellants.Eric A. Easton and Peter K. Michael of the WyomingAttorney General’s Office in Casper, Wyo., representsWOGCC. Steven L. Leifer of Baker Botts in Wash-ington, D.C., and John A. Masterson and Alaina M.Stedillie of Lewis Roca Rothgerber in Casper representHalliburton. �

Order To Produce Seismic DataAffirmed; Water Well SuitFact Discovery Ends May 23SCRANTON, Pa. — Phase 1 fact discovery in a law-suit in the U.S. District Court for the Middle Districtof Pennsylvania alleging contamination of residentialwater wells with hydraulic fracturing chemicals closesMay 23; a motion by the natural gas extraction com-pany defendants for reconsideration of an October2013 order to produce seismic data and open holelogs was denied in January (Susan Berish, et al. v.Southwestern Energy Production Co., et al., No. 10-1981, M.D. Pa.).

(Order extending discovery deadline available. Docu-ment #94-140513-026R. Order denying motion toreconsider available. Document #94-140513-027R.)

Suzanne Berish is the lead plaintiff among a group ofmore than two dozen residents of Lenox Township,Susquehanna County. The lawsuit was filed in the Sus-quehanna County Court of Common Pleas (SuzanneBerish, et al. v. Southwestern Energy Production Co., etal., No. 10-1882, Pa. Comm. Pls., Susquehanna Co.).The plaintiffs include adults and children who livewithin a quarter mile of the so-called Price Well No. 1.

RemovalSouthwestern Energy Production filed notice ofremoval Sept. 23, 2010, to the Middle District ofPennsylvania.

A motion filed by the plaintiffs for leave to join de-fendants Halliburton Energy Services Inc., BJ Services

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Co., Shlumberger Limited and Union Drilling Inc. wasgranted May 3, 2012, by Judge A. Richard Caputo.

The plaintiffs allege in the third amended complaintfiled May 17, 2012, that Halliburton Energy Services,Union Drilling, Schlumberger Limited and BJ Servicesprovided services, equipment and support to South-western Energy Production, the owner and operatorof Price Well No. 1.

The plaintiffs allege that they have been exposed tohazardous chemicals, including barium, manganeseand strontium, by the hydraulic fracturing of the defen-dants. As a result of the fracking, their real propertieshave been damaged, and the value of their real proper-ties has been diminished, according to the plaintiffs.

Plaintiff Connor Seamon avers that as a result of drink-ing contaminated water, he has become physically illand manifests neurological symptoms of exposure totoxicants, including heavy metals. The plaintiffs allegenegligence, private nuisance, strict liability and trespasscauses of action.

The plaintiffs seek an injunction ordering the defen-dants to stop releasing contaminants, which they allegeis a violation of the Pennsylvania Hazardous SitesCleanup Act (35 Pa. Statutes subsection 6020.1.1).They also seek compensatory and punitive damagesin addition to creation of a medical monitoring fund.

The plaintiffs voluntarily dismissed SchlumbergerLimited in November 2012.

Seismic DataJudge Caputo entered an order Aug. 27, 2013, instruct-ing Southwestern Energy Production and SchlumbergerTechnology Corp., a nonparty contractor, to file briefsregarding the discovery of seismic data and open holelogs. The defendants opposed the release on the groundsthat the data are trade secrets.

Judge Caputo issued an order Oct. 11 granting the plain-tiffs access to seismic data and open hole logs. The orderwas stayed Oct. 28 pending disposition of the motionto reconsider filed Oct 24.

Judge Caputo denied the motion Jan. 16. ‘‘There are sixelements used to determine whether information mustbe kept secret so it confers a competitive advantage to

the owner of the information [Pestco Inc. AssociatedProducts Inc., 800 A2d. 700, 706 (Pa. Super. 2005)],’’according to Judge Caputo. ‘‘The burden is on SEPCO[Southwestern Energy Production Co.] to demonstratethat the open hole logs and the seismic data are tradesecrets.’’

First, the information claimed by Southwestern EnergyProduction to be a trade secret is known by Schlum-berger and an unknown number of employees, accord-ing to Judge Caputo. ‘‘Moreover, there is no evidenceof any protection SEPCO required of Schlumberger torequire its employees of the information learned bothwhile working at Schlumberger and after leavingSchlumberger’s employ.’’

Second, some 25 to 50 Southwestern Energy Produc-tion employees are aware of the information, accordingto Judge Caputo. ‘‘There is no evidence of any require-ments on SEPCO’s employees regarding the prohibi-tion of dissemination of this information while in theemploy of SEPCO or thereafter.’’

Third, Southwestern Energy Production shared theinformation with Schumberger, a contractor, accordingto Judge Caputo. The distribution of the informationis unknown, and there is no evidence of restrictions onthe distribution of the evidence.

Value Of InformationFourth, there is a lack of evidence of the value of theinformation about the information, according to JudgeCaputo. Fifth, it is undisputed that Southwestern EnergyProduction spent considerable money to develop thedata, which mitigates in favor of classifying the infor-mation as a trade secret.

Finally, the sixth issue concerns the value of the dataabout Price No. 1 Well to other potential well sites. Theauthority cited by the defendants for trade-secret classi-fication under this test, the Texas Supreme Court opi-nion in In re Bass (113 S.W.3d 735 [Texas 2003]), isdistinguishable, according to Judge Caputo.

‘‘In Bass, the non-participating royalty interest ownersof land sued the mineral estate owner claiming thatimplied duty to develop the land was breached. Themineral estate owner contracted with Exxon to run ageological survey of seismic activity on the entire land.The mineral estate owner never opted to develop the

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land. In seeking to support their claim of breach ofimplied duty to develop the land, the royalty interestowners sought the seismic data because it would ‘revealwhether development would be profitable.’ In re Bass,113 S.W.3d at 738.’’

The seismic data at issue in Bass was not confined to asingle well, according to Judge Caputo. ‘‘In Bass, it isapparent that it relates to the entire 22,000 acres.’’

For these reasons, the motion to reconsider is denied,according to Judge Caputo.

The parties stipulated Feb. 28 to an extension of thecase management deadlines. Judge Caputo endorsedthe stipulation March 3. Fact discovery, includingfact depositions, will be completed by May 23, accord-ing to Judge Caputo. ‘‘All other deadlines in the SecondAmended Case Management Order dated September30, 2013 shall be extended accordingly.’’

CounselPatrick Walsh of Kelly, Polishan, Walsh & Solfanelliof Old Forge, Pa., represents Price. Michael Gleeson,M.D., of the Law Office of Michael Gleeson in Arch-bald, Pa., Peter J. Cambs and William J. Dubanevichof Parker Waichman in Port Washington, N.Y., andChristopher P. Caputo of Caputo & Mariotti in Moo-sic, Pa., represent the plaintiffs.

Joel Robin Burcat and Matthew M. Haar of SaulEwing in Harrisburg, Pa., and John H. Barr, MichaelC. Connelly and Robert D. Ayers of Bracewell & Giu-liani in Houston represent BJ Services. David R. Fineand George A. Bibikos of K&L Gates in Harrisburgrepresent Southwestern Energy Production and Halli-burton Energy Services. Patricia Fecile-Moreland ofMarks, O’Neill, O’Brien & Courtney in Philadelphiaand David P. Helwig of Marks, O’Neill, O’Brien &Courtney in Pittsburgh represent Union Drilling. �

Texas Jury Awards $2.9 MillionTo Family Alleging HarmFrom Natural Gas FracturingCase name: Lisa Parr, et al. v. Aruba Petroleum Inc.

Case number: 11-1650

Court: County Court at Law No. 5 of Dallas County,Texas

Judge: Mark Greenberg

Verdict / Settlement (breakdown): $2.9 million($275,000 diminution of real property value, $750,000each for past physical pain and suffering to Bob andLisa Parr, $500,000 past physical pain and suffering toEmma Duval, $100,000 each for future physical painand suffering to Bob and Lisa Parr, $50,000 for pastphysical pain and suffering to Emma Duval, $100,000each to Bob and Lisa Parr for past mental anguish,$100,000 for past mental anguish to Emma Duval)

Plaintiff(s): Lisa Parr, minor daughter Emma Duval,Robert Parr

Defendant(s): Aruba Petroleum Inc.

Date: April 22, 2014

Background: Lisa and Robert Parr own 40 acres overthe Barnett Shale in Wise County, Texas. Hydraulicfracturing for natural gas extraction began in 2008 inthe Barnett Shale. Twenty-two wells eventually weredrilled within two miles of the Parrs’ residence; nowells or natural gas extraction activities occur on theParrs’ tract. The Parrs attribute their personal injuriesand property damage to benzene, toluene, ethylben-zene, xylene and other volatile organic compoundsused to complete the wells by hydraulic fracturing.The Parrs named 11 defendants in the lawsuit filedin 2011. Aruba Petroleum Inc. and Encana Oil &Gas (USA) Inc. remained as defendants in the 11thamended petition filed Sept. 17, 2013. HalliburtonCo. was granted a no-evidence summary judgmentin 2013 on the grounds that its actions were not theproximate cause of the Parrs’ alleged injuries. Settle-ments were reached with the remaining defendantsprior to trial. Aruba Petroleum was granted summaryjudgment on negligence, gross negligence and trespasscauses of action. The trial proceeded on the claim ofprivate nuisance against Aruba Petroleum. The jury wasinstructed to determine if Aruba Petroleum intention-ally created a private nuisance and if the company’sconduct was abnormal and out of place; five of thesix the jurors answered the first question in the affirma-tive and the second question in the negative. The jurydeclined to award punitive damages.

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Claim: Personal injury, property damage

Injury: Chronic nose bleeding, irregular heartbeat,muscle spasms, open sores, emotional distress, harm tolivestock, damage to the environment, loss of propertyvalue

Defense: The Parrs cannot prove Aruba Petroleumcaused their injuries because of the number of wellsdrilled near their property by other oil and gas com-panies. Aruba Petroleum complied with applicablefederal and state laws and air quality and drilling safetyguidelines established by the Texas Railroad Commis-sion and the Texas Commission on EnvironmentalQuality.

Other:

Plaintiff attorneys: Brad J. Glide, Glide Law Firm,Houston; David Matthews, Mathews & Associates,Dallas; Richard A. Capshaw, Capshaw & Associates,Dallas

Defense attorneys: Ben Barron, Ben K. Barron PC,Dallas; Michael J. Mazzone, Haynes & Boone, Houston

Key related documents: 11th amended complaintavailable. Document #15-140506-058C. Verdict inSection B. Document #15-140506-057V. �

Louisiana Appeals Panel RulesPlaintiffs Lack StandingTo Seek Restoration DamagesLAKE CHARLES, La. — A unanimous Third CircuitLouisiana Court of Appeal panel on May 7 affirmedsummary judgment against surface estate owners seek-ing damages from oil and natural gas operators forallegedly failing to restore the surface estate; the panelapplied the subsequent purchaser doctrine and con-cluded that the plaintiffs lack standing to seek dam-ages for alleged injuries before they purchased thesubject land (Carlos Boone, et uxor v. ConocoPhillipsCo., et al., No. 13-1106, La. App., 3rd Cir.; 2014 La.App. LEXIS 1204).

(Opinion in Section A. Document #94-140513-012Z.)

Carlos and Lori Boone appealed a motion for sum-mary judgment and exception of prescription decidedagainst them in the Louisiana 15th Judicial DistrictCourt of Vermillion Parish (No. 92292). Judge JohnDamian Trahan granted the motion filed by EnerQuestOil & Gas, a former lessee of the property.

Rights ReservedThe Boones purchased 18.66 acres of land encumberedby mineral reservations and oil and natural gas leases for$120,000 in August 2005 from Primeaux PropertiesInc. Primeaux Properties purchased the tract in 2003from Aaron Lagneaux and Eric Lagneaux, who inher-ited the property. Oil and natural gas operations on theproperty date back to 1972. The Lagneauxs reservedthe minerals and mineral rights of the property in the2003 sale.

EnerQuest acquired the wells and operating rightson the tract in 2000 from Phillips Petroleum Co. Ener-Quest sold its operating rights and interest in the prop-erty to Petro ‘‘E’’ in 2004. The sale and assignment toPetro ‘‘E’’ included EnerQuest’s use of the surface of thesubject property and the obligation to clean and restorethe surface.

The Boones asserted contamination and propertydamage in the lawsuit filed in May 2010. The Boonesalleged claims against six oil and natural gas operators.They allege claims against ConocoPhillips Co. as suc-cessor to Phillips Petroleum, EnerQuest and Petro ‘‘E’’and three other operators.

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In support of their claims, the Boones alleged the dis-covery of abandoned debris and equipment on the landand asserted a failure to properly clean and restore theproperty. The Boones identified three of five wells onthe property in a first amended petition filed in July2012 that they allege were operated by EnerQuestbefore its sale to Petro ‘‘E.’’

EnerQuest moved for summary judgment on thegrounds that the Boones as a matter of law are pre-cluded from asserting a tort or contract claim for prop-erty damage before its 2005 acquisition of the propertywithout a specific assignment of that right from PhillipsPetroleum.

Leave To AmendThe Boones offered assignments of rights from Pri-meaux and the Lagneauxs in response to the summaryjudgment motion. Judge Trahan granted the Boonesleave to file a supplemental and amending petitionasserting their right as assignees to the rights of theprevious owners, claims for fraud and conspiracy andsolidary liability of all defendants.

Judge Trahan then granted EnerQuest summary judg-ment andexceptionof prescription. The Boones appealed.

‘‘We begin with a review of the subsequent purchaserrule or doctrine [Eagle Pipe and Supply Inc. v. AmeradoHess Corp., 79 So.3d 246, 256-57 (La. 10/25/11)],’’Judge Ulysses Gene Thibodeaux wrote for the panel.

‘‘Relevant to our inquiries here, a real right is notdefined by the Civil Code but has long been held tobe a proprietary interest and a species of ownership,which ‘defines the relation of man to things and may,therefore, be declared against the world.’ Eagle Pipe andSupply, Inc., 79 So.3d at 259,’’ according to the panel.‘‘A real thing and a real obligation both attach to athing. Id. at 261; La. Civ. Code art. 1764, RevisionComments—1984, (b).’’

‘‘As illustrated by Eagle Pipe and Supply, Inc. through itsanalysis of Clark v. J.L. Warner Co. et al., La. Ann. 408(1851) and subsequent jurisprudence, the formerowner retains the right to recover damages caused bythe former owner’s lessee during the former owner’sownership of the property,’’ according to the panel.

The August 2005 sale and conveyance of the propertyfrom Primeaux to the Boones does not assign the seller’s

personal right to sue the lessee for damage done to theland before the date of the sale, according to the panel.

‘Subsequent Purchaser’‘‘Lagneaux reserved the rights to himself in 2003, andin 2005 Primeaux, who never obtained them fromLagneaux, referenced the mineral and lease reservationsin its sale to the Boones and pointed the Boones to therecorded prior act of sale from Lagneaux. Accordingly,the Boones knew that the land was encumbered byreserved mineral rights and leases. Under the subse-quent purchaser doctrine, they do not have a right ofaction to sue for damages occurring prior to their ac-quisition of the property.’’

In an attempt to sue EnerQuest, the Boones obtainedassignments from Lagneaux and Primeaux in September2012, according to the panel. ‘‘We find that the assign-ments also fail to provide the plaintiffs with a right ofaction for pre-acquisition damages against EnerQuest.’’

Lagneaux had no right of action in tort against Pri-meaux to assign in 2012 as a matter of law, accordingto the panel. Louisiana Civil Code Article 3493, whichgoverns damage to immovable property, has a one-yearstatute of limitations. The statute of limitations expiredin March 2004, according to the panel.

Primeaux could not assign contractual rights to theBoones in September 2012 because it did not acquirecontractual rights from Lagneaux in 2003, accordingto the panel. ‘‘Accordingly, the Boones did not obtainany tort or contract rights from the previous ownersvia the assignments to sue for damages prior to theact of sale in 2005.’’

Alternatively, the Boones aver that they have a right ofrecovery as third-party beneficiaries of the surface leasegranted in 2002 by Lagneaux to EnerQuest, accordingto the panel. In Andrepont v. Acadia Drilling Co. (231So.2d 347 [1969]), the Louisiana Supreme Court iden-tified three criteria for determining if contracting partiesprovided a benefit for a third party. The Boones havenot met their burden of proving they are third-partybeneficiaries under the contracts, according to thepanel.

‘Withheld Its Lease’Finally, the Boones aver that the 2002 surface leasehad a 10-year term and was effective until 2012, which

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included their ownership of the surface, according to thepanel. ‘‘We disagree. As previously discussed, Lagneauxwithheld its leases and contractual rights from assign-ment to the Boones, and in any event the surface leasedid not provide for damages. It only provided for restora-tion which was not due until six months after the leaseexpired.’’

‘‘Based upon the foregoing, we affirm the trial court’sjudgment granting the motion for summary judgmentand exception of prescription in favor of EnerQuest Oil& Gas, LLC. Costs of this appeal are assessed to theplaintiffs, Carlos and Lori Boone.’’

Judges Sylvia R. Cooks and John E. Conery joined inthe opinion.

Warren A. Perrin of Perrin, Landrey, deLaunary, Dar-tez & Ouellet in Lafayette, La., and Michael GregoryStag of Smith Stag in New Orleans represent the plain-tiffs. Morgan J. Wells Jr. of Larzelere Picou Wells Simp-son Lonero in Metairie, La., represents EnerQuest.Rebecca H. Dietz of King, Krebs & Jurgens in NewOrleans represents ConocoPhillips. �

Legacy Oil Pollution ClaimsDismissed Without PrejudiceIn Louisiana Federal CourtNEW ORLEANS — Defense motions to dismiss weregranted in part on April 22 with leave to amend in awell field legacy contamination lawsuit pursued bylandowners in the U.S. District Court for the EasternDistrict of Louisiana (Catherine P. Alford, et al. v.Chevron USA Inc., et al., No. 13-5457 [consolidated],E.D. La.; 2014 U.S. Dist. LEXIS 55724; See 4/15/14,Page 27).

(Order available. Document #15-140506-037R. Thirdamended complaint available. Document #15-140506-038C. Brief in support of motion to reconsideravailable. Document #15-140506-039B. Responseto motion to reconsider available. Document #15-140506-041B.)

Plaintiffs led by Catherine Alford filed suit in the 25thJudicial District Court in Plaquemines Parish, La., (No.60-4883) to recover damages for contamination of their

property in the so-called Potash Field by oil and gasoperators Chevron USA Inc., Goodyear PetroleumCo., Hilcorp Energy I, Laurent Oil & Gas, MalloyEnergy Co., Noble Energy Inc., Shell Oil Co., ExxonMobil Corp., Gulf Oil Corp., Anadarko E&POnshore, BP America Production Co., Chevron USAHoldings Inc., Four Star Oil and Gas, French GulfCoast Partners and Pan American Petroleum Corp.

Removing DefendantThe lawsuit was removed in August 2013 by Chev-ron USA.

This so-called legacy litigation, as described in Marin v.Exxon Mobil Corp. (48 So.3d 234, 238 [La. 2010]),arises from operations conducted decades ago that leftan unwanted legacy in the form of actual or allegedcontamination, according to Judge Sarah S. Vance.Facilities constructed by the defendants during extrac-tion operations allegedly released hazardous substancesonto the plaintiffs’ property, according to Judge Vance.

Exxon Mobil moved to dismiss or for a more definitestatement in September 2013, which Judge Vancegranted in part on April 1 with leave to amend (2014U.S. Dist. LEXIS 44621). Judge Vance denied themotion for a more definite statement. Pursuant to theApril 1 order, the plaintiffs filed a third amended sup-plemental complaint on April 21.

Exxon Mobil on April 11 moved for reconsiderationwith respect to the classification of servitude andimplied obligations of mineral servitude holders.Exxon Mobil challenges the application of the obliga-tions as successor to Humble Oil & Refining.

‘‘The Court’s Order and Reasons states that theFebruary 17, 1960 Servitude Agreement attached toPlaintiffs’ petition grants a mineral servitude to Hum-ble Oil on Plaintiffs’ property. Exxon respectfully sub-mits that this legal conclusion is manifestly erroneous,as the Servitude Agreement does not convey any rightsto Exxon with respect to exploring for, producing, orreducing minerals to possession or ownership.’’

The agreement grants only rights with respect to con-struction and maintenance of pipelines and equipmentfor treating, transporting and storing oil, gas, sulfur,saltwater brine and other minerals on the subjectland, according to Exxon Mobil. ‘‘Absolutely no rights

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to explore for, produce, or reduce to possession andownership any minerals are transferred through thedocument. Thus, by its very terms, the 1960 ServitudeAgreement cannot be classified as a Mineral Servitude.’’

ReconsiderBecause the agreement does not convey mineral servi-tude or mineral rights, the plaintiffs cannot state a causeof action under Louisiana Mineral Code articles 11 and22, according to Exxon Mobil. ‘‘As such, Exxonrespectfully requests this Court reconsider its findingthat Exxon is a mineral servitude owner, and therefore,its conclusion that ‘the complaint plausibly alleges thatExxon breached the duties it owes to plaintiffs as amineral servitude holder to ‘keep[] the property subjectto the [servitude] in good order’ and to ‘exercise [its[rights with reasonable regard’ for those of plaintiffs.’ ’’

The plaintiffs cite Louisiana Civil Code 639 in an April28 response to the motion to reconsider. ‘‘Civil CodeArticle 639 declares that a limited personal servitude isa real right that confers ‘in favor of a person a specifieduse of an estate less than full enjoyment,’ ’’ according tothe plaintiffs.

‘‘Because limited personal servitudes such as a minerallease ‘constitute an intermediary category between usu-fruct and predial servitudes,’ they are ‘regulated byapplication of the rules governing usufruct and predialservitudes to the extent that their application is com-patible with the rules governing a right of use of servi-tude.’ [La. Civil Code article 645],’’ according to theplaintiffs. ‘‘Both the rules governing usufruct and therules governing predial servitudes require restoration ofthe thing subject to the usufruct or predial servitude.’’

‘‘Exxon clearly has the obligation of ‘preserving thesubstance’ of the plaintiffs’ property under both the1950 Lease and the 1960 Servitude [Eagle Pipe andSupply Inc. v. Amerada Hess Corp., 79 So.3d 246,258-259],’’ according to the plaintiffs.

The plaintiffs also aver that they have the right to enforcemineral lessee obligations arising from the end ofmineral lease. ‘‘Exxon ignores the fact that a minerlease is ‘a hybrid institution’ [Mineral Code Article16] that may be classified as a limited personal servi-tude,’’ according to the plaintiffs.

Eagle Pipe‘‘When the mineral lease terminates, the lessee’s obliga-tion to the surface owner does not disappear, as the lessee

is ‘always with the obligation of preserving the sub-stance.’ [Eagle Pipe, 79 So.3d at 258-259] (emphasisadded),’’ according to the plaintiffs.

‘‘Exxon is responsible for its obligations both underthe 1950 Lease and the 1960 Servitude,’’ according tothe plaintiffs.

The order issued April 22 grants in part with leave toamend motions filed in September 2013 by ChevronUSA, Four Star Oil and Gulf Oil (collectively, Chev-ron); Anadarko E&P Onshore, BP America and PanAmerican Petroleum (collectively, BP); Hilcorp EnergyI; and French Gulf Coast Partners to dismiss certain ofthe plaintiffs’ claims and for a more definite statement.Judge Vance denied the motions for a more definitestatement.

Judge Vance dismissed all the claims without prejudice,except the claims under Civil Code articles 2683(2),2686 and 2692 and Mineral Code articles 11 and 122.The plaintiffs have 21 days to file an amended complaint.

Judge Vance dismissed claims for restoration damagesunder Civil Code article 2683(3) as premature becausethe plaintiffs do not allege that the 1950 lease hasexpired. The plaintiffs are correct that obligationsimposed on lessees under Civil Code articles 2683,2686, 2688 and 2692 and articles 11 and 122 of theMineral Code continue (Marin, 48 So.3d at 256),according to Judge Vance.

Civil Code article 2683(2) and Mineral Code articles11 and 122 collectively require mineral lessees to useleased property as a so-called prudent administrator,according to Judge Vance. The plaintiffs allege in thearticle 2686 claim that the defendants used the leasedproperty in a way that may cause damage to the prop-erty, according to Judge Vance. The Article 2692 claimalleges that the subject property was damaged by theimproper storage of waste, which triggers a duty torepair the property, according to Judge Vance.

Without Prejudice

Judge Vance dismissed without prejudice claims for frau-dulent concealment, restoration, breach of express con-tract, violation of the prudent operator doctrine, land loss,punitive damages, continuing trespass, civil fruits, conti-nuing nuisance, strict liability and unjust enrichment.

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Donald T. Carmouche, Diane Adele Owen, JohnHogarth Carmouche, Ross Joseph Donnes, VictorLynn Marcello and William Robert Coenen III of Tal-bot, Carmouche & Marcello in Baton Rouge, La., andWilliam Peter Connick of Connick & Connick inMetairie, La., represent the plaintiffs.

Michael Raudon Phillips, Brittany Buckley Salup,David Philip Curtis, Michelle Purchner Cumberlandand Shannon A. Shelton of Kean Miller in New Orleansand Alan James Berteau, Charles Simon McCowan IIIand Louis Victor Gregoire Jr. of Kean Miller in BatonRouge represent Chevron USA, Gulf Oil, ChevronUSA Holdings and Four Star Oil and Gas.

Loulan Joseph Pitre Jr., Demarcus J. Gordon, JaneJackson and Terrence Kent Knister of Gordon, Arata,McCollam, Duplantis & Egan in New Orleans repre-sent Goodrich Petroleum and Malloy Energy. Craig

Isenberg, Andrea Mahady Price, Michelle M. Ruther-ford, Richard Edward Sarver and Zachary I. Rosenbergof Barrasso, Usdin, Kupperman, Freeman & Sarver inNew Orleans represent Hilcorp Energy I. Paul J.Hebert and David K. McCory of Ottinger Hebert inLafayette, La., represent Laurent Oil & Gas.

Joseph P. Farnsworth and Daria Burgess Diaz of StonePigman Walther Wittman in New Orleans representNoble Energy. Patrick Wise Gray, Amy Allums Leeand Jack Brandon Stanley of Johnson Gray McNamarain Lafayette represent Shell Oil. Phillip E. Foco of Tay-lor, Porter, Brooks & Phillips in Baton Rouge andAnthony Joseph Lascaro and John Allain Viator ofBienvenu, Bonnecaze, Foco, Viator & Holinga inBaton Rouge represent Exxon Mobil.

James E. Lapeze and Jonathan J. Fox of Liskow &Lewis in New Orleans represent Anadarko E&P.

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James P. Dore of Kean Miller, Amy DeGeneres Berret,Benn Vincent and Shelly J. Harrison in Baton Rougerepresent BP America Production. Patrick S. Ottingerand Hebert of Ottinger Hebert in Lafayette representFrench Gulf Coast Partners. Dore and Vincent repre-sent Pan American Petroleum. �

Oklahoma Class PlaintiffsAppeal Dismissal Of ClaimsFor Waste Hauling PollutionDENVER — Class action representatives of an Okla-homa action alleging fly ash and produced water con-tamination filed an appellant brief April 21 in the 10thCircuit U.S. Court of Appeals seeking reversal of anorder denying remand under the local controversyexception to the Class Action Fairness Act of 2005or, alternatively, vacating summary judgment for defen-dants for failing to state a claim (William Reece, et al. v.AES Corp., et al., No. 14-7010, 10th Cir.).

(Appellant brief available. Document #94-140513-030B.)

Bill Reece is the lead plaintiff in a putative class actionremoved in November 2012 to the U.S. District Courtfor the Eastern District of Oklahoma (Bill Reece, et al. v.AES Corp., et al., No. 12-457, E.D. Okla.; 2013 U.S.Dist. LEXIS 2236) pursuant to the Class Action Fair-ness Act (CAFA; U.S. Code 28:1332[d]) by XTOEnergy Inc. from the LeFlore County, Okla., CountyCourt (No. 11-256).

Amended ComplaintThe plaintiffs filed a first amended complaint on Aug.20, 2013, alleging claims against AES Corp., AESShady Point Inc., AES Shady Point, MMHF aka Mak-ing Money Having Fun, Thumbs Up Ranch, DarylJackson dba Daryl Jackson Trucking, Kevin J. Jackson,Kenneth Jackson, Chad Jackson, GCI Mining akaGeorge Colliers Inc., Mountain Minerals, BrazilCreek Minerals Inc., Farrell-Cooper Mining Co., AshGrove Resources, Marine Coal Sales Co., Hunter RidgeCoal Co., International Coal Group, Coal CreekMinerals, McCorkle Truck Line Inc., Star Bulk akaPX Transportation Inc., R&J Trucking Inc., SEECOInc., XTO Energy Inc., Stephens Production Co.,Chesapeake Operating Inc., Petrohawk Operating

Co., Hanna Oil & Gas Co., Highland Oil & Gas,Cholla Petroleum Inc., BP America Production Co.,Ross Production Co., Shields Operating Inc., SednaEnergy Inc., Hogback Exploration Inc., Bishop Truck-ing, Bear Productions Inc., Graco Fishing & RentalTools Inc., TXD Transport, Mike Krebbs Construc-tion Inc., Big Mac Tank Trucks, Oklahoma Big MacTank Truck, B&B Gas Well Services Inc. and BearTransports.

The plaintiffs allege that chemicals in oil and natural gaswell waste and in coal combustion waste and fly ashhauled to and deposited at a dump site one mile southof Bokoshe, Okla., in LeFlore County have contami-nated the environment where they live and work. Thehaul routes to the dump site are also contaminatedwith fugitive chemicals from the hazardous wastes, ac-cording to the plaintiffs.

Defendants AES, AES Shady Point Inc. and AES ShadyPoint own a coal-fired electricity generation plant inLeFlore County, according to the plaintiffs. DefendantsGCI Mining, Mountain Minerals, Brazil Creek Miner-als, Farrell-Cooper Mining, Ash Grove Resources, Mar-ine Coal, Hunter Ridge, International Coal and CoalCreek deliver coal and limestone to the AES ShadyPoint plant, according to the plaintiffs.

Well DefendantsDefendants SEECO, a wholly owned subsidiary ofSouthwestern Energy; XTO Energy; Stephens Produc-tion; Chesapeake Operating; Petrohawk Operating;Hanna Oil & Gas; Highland Oil & Gas; Cholla Pet-roleum; BP America Production; Ross Production;Shields Operating; Sedna Energy; Hogback Explora-tion own oil and natural gas wells in Arkansas andOklahoma, according to the plaintiffs.

Defendants Bishop Trucking, Bear Productions, GracoFishing & Rental Tools, TXD Transport, Mike KrebbsConstruction, Big Mac Tank Trucks, B&B Gas WellServices and Bear Transports hauled produced fluidwastes (PFW) from the oil and natural gas wells tothe MMHF dump site, according to the plaintiffs.

Making Money Having Fun operates the MMHF dis-posal site, according to the plaintiffs. Thumps Up Ranchowns the land where the disposal site is located. Daryl,Kevin, Kenneth and Chad Jackson own Thumbs UpRanch, according to the plaintiffs.

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By disposing of the waste and fly ash at the dump, theAES defendants have caused the release of arsenic, bar-ium, chromium, copper, lead, manganese, mercury,nickel, vanadium and zinc from the dump site, accord-ing to the plaintiffs.

The PFW from oil and gas wells includes saltwater,sand, acid, oil- and water-based drilling fluids, comple-tion flowback fluid, frack flowback fluid, workoverflowback fluid, rainwater gathered at the well sites, dril-ling cuttings and pit water generated in the extractionof oil and natural gas, according to the plaintiffs.

The plaintiffs allege that they are exposed to hydrochlo-ric acid, hydraulic fracturing sand, diesel fuel, surfac-tants, potassium chloride, benzene and isopropanolfrom the PFW.

Class AreaThe plaintiffs allege that the class area is within threemiles of the MMHF dump.

Class claims alleged by the plaintiffs in the firstamended complaint are abnormally dangerous activitystrict liability, public and private nuisance, trespass,negligence, negligence per se, trespass, diminution ofproperty values, personal injury, unjust enrichmentand violations of Oklahoma law.

The damages alleged by the plaintiffs are diminutionof property value; loss of use of property; contaminationof soil, surface and groundwater and the air; and perso-nal injuries such as respiratory conditions, skin and eyeirritations, cancer and death.

The plaintiffs in December 2012 moved to remandunder the local controversy and home state exceptionsto CAFA. Judge Heaton denied the motion in April2013 after concluding that the plaintiffs had not mettheir burden of establishing class citizenship.

The plaintiffs filed a renewed motion to remand inMay 2013 with a proffer of class membership and addi-tional evidence of class citizenship. Judge Heatondenied the motion and declined to consider the profferof citizenship evidence as untimely.

The defendants in September 2013 moved to dismissthe first amend complaint for failure to state a claimpursuant to Federal Rule of Civil Procedure 12(b)(6).

Judge Heaton granted the motion on Jan. 8, 2014, andentered final judgment on Jan. 28 for the defendants.The plaintiffs appealed.

The plaintiffs assign errors with respect to the denialof remand under the local controversy exception toCAFA and to dismissal for failing to state a claim.

‘Local Controversy’‘‘The allegations set forth in the FAP [first amendedpetition] and the reasonable inferences and interpre-tation of those allegations demonstrate that this caseis a local controversy,’’ according to the plaintiffs.

‘‘The district court’s failure to remand this case to statecourt as a local controversy pursuant to 29 U.S.C.A§ 1332(d)(4)(A) was [in] error and undermines CAFA’sstatutory purpose,’’ according to the plaintiffs.

The plaintiffs aver that they met their burden ofshowing that at least one defendant is ‘‘significant’’and a citizen of Oklahoma and that the principal inju-ries occurred in Oklahoma.

With respect to the failure to state a claim error, theplaintiffs aver that they satisfied Federal Rule of CivilProcedure 8(a)(2). ‘‘The FAC [first amended com-plaint] alleges facts which if taken as true, for the pur-poses of Fed.R.Civ.P. 12(b)(6), provide the districtcourt and Defendants with exactly the kind of noticeand evidence of Appellants’ claims and demands forrelief to which Defendants are entitled,’’ according tothe plaintiffs.

‘‘Together with the prodigious body of probative evi-dence pled with specificity by Appellants, and the im-portant inferences which reasonably can and must bedrawn in Appellants’ favor, the FAC satisfies in everyrespect the ‘short and plain statement’ requirement ofFed.R.Civ.P. (8(a), as well as the ‘plausible’ referenceexpressed in Bell Atl. Corp., [Bell Atlantic Corp. v.Twombly, 550 U.S. 544 (2007)] 550 U.S. 544,’’ accord-ing to the plaintiffs.

‘‘For the foregoing reasons, Appellants respectfullyrequest that this Court reverse the district court’sorder denying remand as to this action in its entirety.Alternatively, Appellants further request this Courtvacate the district court’s order dismissing Appellants’claims, both with prejudice and without on the basis

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that Appellants have met the pleading standards setforth under Fed.R.C.P. 8(a).’’

CounselClark O. Brewster, Montgomery L. Lair and J. RandallMiller of Brewster & De Angelis in Tulsa, Okla., repre-sent the plaintiffs.

David W. Wulfers, Todd Maxwell Henshaw, Kara E.Moore and Shannon Davis of James, Potts & WulfersInc. of Tulsa and Mary B. Scott and William McAlisterof Abowitz, Timberlake, Dahnke & Gisinger in Okla-homa City represent Bear Productions and BearTransports.

Jeff Belote of Jeff Belote Law in McAlester, Okla.,represents Integrity Energy. Linda C. Martin and N.Lance Bryan of Doerner, Saunders, Daniel & Andersonin Tulsa and Dru Warren of Dru Warren Law inPoteau represent MMHF, Thumbs Up Ranch andthe Jacksons. Matthew S. Panach, Bradley A. Gungolland Jordan K. Russell of Gungoll, Jackson, Collins, Box& Devoll in Enid, Okla., represent Quick Transport.

James M. Reed, Michael E. Smith and Sharon T. Tho-mas of Hall, Estill, Hardwick, Gable, Golden & Nelsonin Tulsa represent AES Corp., AES Shady Point, Mon-tana Minerals and Coal Creek Mineral. Brian R.McLaughlin of McLaughlin & Sanders in Stigler,Okla., represents Bishop Trucking and B&B GasWell Services. Matthew T. Warren Gotcher and Mat-thew Thomas Sheets of Gotcher & Beaver in McAles-ter, Okla., represent Mike Krebbs Construction.

Floyd James III of Law Offices of Green, Johnson &Mumina in Oklahoma City represents GCI Mining.Mark K. Stonecipher and Lance E. Effel of Fellers,Snider, Blankenship, Bailey & Tippens in OklahomaCity represent TXD Transport. Harold E. Heath ofHarold Heath Law Offices in Holdenville, Okla., repre-sents C&C Tank Service. Robert M. Honea of Hardin,Jesson & Terry in Fort Smith, Ark., represents XTOEnergy, Cholla Petroleum and Hogback Exploration.

Defense CounselC. Michael Daily of Daily & Woods in Fort Smithrepresents Hanna Oil & Gas and Shields Operating.Pine Drewyor of Kendall Drewyor Law Firm in Rogers,Ark., and Sherry P. Bartley of Mitchell Williams Law inLittle Rock represent Farrell-Cooper Mining and Brazil

Creek Minerals. Charles D. Neal, Gary C. Crapster andRachel D. Parrilli of Steidley & Neal in Tulsa, Jeff A.Woods, Justin W. Ross and Courtney Ross Samfordof Wyatt, Tarrant & Combs in Louisville, Ky., andGeorge P. Sibley III, Robert M. Rolfe, D. Alan Rudlinand Joshua P. Hanbury of Hunton & Williams inRichmond, Va., represent Marine Coal Sales, Interna-tional Coal Group and Hunter Ridge Coal.

Steven E. Holden and Ryan C. Harper of Holden &Carr in Tulsa and Jason T. Seay of Tulsa representEastern Tank Service. L. Mark Walker and C. MilesTolbert of Crowe & Dunlevy in Oklahoma City repre-sent A&A Tank Truck. Timothy J. Bomhoff andJodi W. Disman of McAfee & Taft in OklahomaCity in represent Chesapeake Operating, PetrohawkOperating, SEECO and Ross Explorations. WilliamS. Leach and Jessica L. Dickerson of McAfee & Taftin Oklahoma City represent Ross Explorations.

Michael J. McDaniel, Robert P. Coffey Jr., Philard L.Rounds Jr. and David C. Senger of Brennan, Smith &Cherbini in Muskogee represent C&C Tank TruckServices. Philip O. Watts of Oklahoma City, AllisonJ. Maynard of Wilson, Elser, Moskowitz, Edelman &Dicker in Dallas and Sean M. Higgins of Wilson Elserin Houston represent Ash Grove Resources.

Daniel K. Zorn and Stephen R. Palmer of Collins,Zorn & Wagner in Oklahoma City represent BigMack Tank Trucks. Shannon H. Ratliff and Lisa A.Paulson of Ratliff Law Firm in Austin, Texas, andAndrew D. Sims, Russel R. Barton and Michael V.Fitzpatrick of Harris, Finley & Bogle in Fort Worth,Texas, represent XTO Energy.

Additional Defense CounselR. Stratton Taylor, Clint Russell and Sean Burrageof Taylor, Burrage, Foster, Mallett, Downs, Ramsey& Russell in Claremore, Okla., represent Stephens Pro-duction. Neal Tomlins of Tomlins Law in Tulsa rep-resents Sinclair Trucking. Jared D. Giddens and J.Dillon Curran of Conners & Winters in OklahomaCity represent Graco Fishing & Rental Tools. WilliamD. Perrine, Reagan L. Madison and James N. Crews ofPittman, MacIsaac & Roy in Calgary, Alberta, Canada,represent PX Transportation.

Thomas M. Ladner of Ladner, Little & Eldredge inTulsa and Stephen M. Ryan of DLA Piper in Houston

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represent Highland Oil & Gas. Truman B. Ruckler Jr.of Tulsa in represents Sedna Energy. Rick D. Wescottof Wescott Law Office in Tulsa represents HogbackExploration. Ian P. Faria of Coats Rose in Houstonrepresents Big Mac Tank. �

Texas Supreme Court RemandsAttorney Fee Award DisputeArising From Royalty SuitAUSTIN, Texas — The Supreme Court of Texasissued a per curiam opinion on April 25 remandingan attorney fee dispute with instructions for the trialcourt to develop a record sufficient to calculate attorneyfees with the lodestar method; the disputed attorneyfees are from a lawsuit to enforce an assignment ofworking interests in oil and natural gas producing wells(Larry T. Long, et al. v. Robert M. Griffin, et al., No. 11-1021, Texas Sup.).

(Opinion available. Document #15-140506-061Z.)

Robert M. Griffin, Robert M. Griffin Jr., Marvin andMarie Ogilvie and Charles Conrad sued Larry T. Long,L. Allan Long and B. Virginia Long in their capacitiesas the trustees of the Lawrence Allan Long Trust, theCharles Edward Long Trust, the Larry Thomas LongTrust and the John Stephen Long Trust in the 124thDistrict Court in Gregg County (No. 97-1009) in con-nection with oil and natural gas ventures.

Working InterestThe plaintiffs allege that the trusts failed to assign theworking interest due them under assignment agree-ments in which the plaintiffs agreed to pay a portionof drilling and operating costs in exchange for partialworking interests in producing wells.

The plaintiffs filed an affidavit in 2001 supporting arequest for attorney fees of $100,000 for 644.5 hoursworked by two attorneys on their behalf. The plaintiffsaverred that 30 percent of the time was spent on theassignment claim but argued that the assignment issuewas ‘‘inextricably intertwined’’ with other claims againstthe trusts on which the attorneys spent 95 percent ofthe time.

Following a 2003 bench trial, Judge Nathan E. Whiteruled for the plaintiffs and awarded them $35,000in fees.

On appeal, the 12th District Court of Appeals affirmedthe judgment with modifications (144 S.W.3d 99).The Texas Supreme Court reversed the appeals court(222 S.W. 3d 412 [Texas 2006]) after concluding thatthe assignment agreements did not comply with thestatute of fraud and could not be enforced on futurewells and that the plaintiffs are not entitled to prevail ona separate claim involving a litigation agreement withthe trusts. The case was remanded to the trial court todetermine the attorney fee award.

On remand, the trial court awarded the plaintiffs$30,000 in fees and post-judgment interest accruingfrom the date of final judgment in 2009. The courtof appeal affirmed the trial court judgment with respectto the attorney fee award in May 2011 but modifiedthe judgment to accrue interest from the 2003 judg-ment of the trial court (No. 09-260, Texas App., 12thDist.; 2011 Tex. App. LEXIS 10143).

Lodestar CalculationIn the instant appeal, the trusts aver that the evidencedoes not support the amount of the attorney fee andthat post-judgment interest should accrue from the2009 final judgment. ‘‘Because the Griffins offered noevidence of the time expended on particular tasks, aswe have required when a claimant elects to prove at-torney’s fees via the lodestar method, we agree with theLong Trusts that the Griffins did not provide the trialcourt with legally sufficient evidence to calculate a rea-sonable fee,’’ according to the court.

‘‘We explained in El Apple I, Ltd. v. Olivas that general-ities about the tasks performed provide insufficientinformation for the fact finder to meaningfully reviewwhether the tasks and hours were reasonable and neces-sary under the lodestar method. 370 S.W.3d 757, 763(Tex. 2012),’’ according to the court. ‘‘Sufficient evi-dence includes, at a minimum, evidence ‘of servicesperformed, who performed them and at what hourlyrate, when they were performed, and how much timethe work required.’ Id. at 764.’’

‘‘Likewise, in City of Laredo v. Montano, we reversedand remanded to redetermine attorney’s fees when theattorney testified to the time expended and the hourlyrate but failed to provide evidence of the time devotedto specific tasks. 414 S.W.3d 731, 736-37 (Tex. 2013).’’

‘‘Here, as in El Apple and Montano, the affidavit sup-porting the request for attorney’s fees only offers gen-eralities,’’ according to the court.

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‘‘We note that here, as in El Apple, contemporaneousevidence may not exist. But the attorneys may recon-struct their work to provide the trial court with suffi-cient information to allow the court to perform ameaningful review of the fee application. El Apple,370 S.W.3d at 764.’’

Alternatively, the plaintiffs argue that the 35 percentcontingency fee agreement is sufficient to establish thatthe claim for attorney fees is reasonable and customary,according to the court. The argument is without merit,according to the court.

Contingency Fee‘‘Even if supporting evidence is not required for thecontingency fee method of proof (as it is for the lodestarmethod), the contingency fee method cannot supportthe trial court’s fee award because the final judgmentawarded no monetary relief except for attorney’s fees.Because the contingency method cannot support thetrial court’s fee award, and no legally sufficient evidencesupports the award under the lodestar method, weremand to redetermine attorney’s fees.’’

The court did not reach the assignment of error relatedto the accrual of interest. ‘‘We are confident that, onremand, the lower courts will apply the principles weclarified in Long v. Castle Texas Production Limited Part-nership, __ S.W.3d __ (Tex. 2014) [2014 Tex. LEXIS252], to properly assess the date from which postjudg-ment accrues,’’ according to the court.

F. Franklin Honea of Law Offices of F. Frank Honeain Dallas, Ronny Lee Adkison of The Adkison LawFirm in Henderson, Texas, and Mike A. Hatchelland Thomas F. Loose of Locke Lord in Dallas representthe trusts. Rex A. Nichols Sr. of Nichols & Nicholsin Longview, Texas, and Andrew George Khoury ofLongview represent the plaintiffs. �

Natural Gas Operator HeldLiable To Indemnify DrillerFor Contamination LitigationCOLUMBUS, Ohio — A natural gas operating com-pany sued by a drilling company with which it con-tracted to spud wells in West Virginia is liable under thedrilling contract to reimburse settlement and litigation

costs for a related well-water contamination lawsuitnaming both companies as defendants, the presidingU.S. District Court for the Southern District of Ohiojudge ruled April 16 (Warren Drilling Inc. v. EquitableProduction Co., No. 12-425, S.D. Ohio; 2014 U.S.Dist. LEXIS 52064).

(Order available. Document #15-140506-006R.)

Warren Drilling Co. Inc. sued Equitable ProductionCo. and Ace American Insurance Co. in April 2012in the Nobel County, Ohio, Court of Common Pleas(No. 12-85) for breach of contract and indemnificationfor contamination of the land surface or water pursuantto a March 2006 drilling contract with respect to Jack-son County, W.Va., natural gas wells. Equitable Pro-duction removed the action in May 2012 to theSouthern District of Ohio and filed cross-claims againstWarren Drilling.

Underlying LawsuitWarren Drilling performed drilling operations on threenatural gas wells from November 2007 to February2008 in Jackson County on property owned by Dennisand Tamera Hagy. The Hagys sued Equitable Pro-duction and Warren Drilling, BJ Services Corp. USAand Halliburton Energy Services, which were hiredby Equitable Production to conduct natural gas welldrilling operations, in the U.S. District Court for theSouthern District of West Virginia for contaminatinga water well on which they depend for domestic water(Dennis Hagy et al. v. Equitable Production Co., et al.,No. 10-1372, S.D. W.Va.; 2012 U.S. Dist. LEXIS91773; See 7/17/12, Page 6). They allege that Equita-ble Production owned and operated the natural gaswells.

The claims against Halliburton and Warren Drillingwere resolved by settlement. The claims against Halli-burton were dismissed May 17, 2012. The claimsagainst Warren Drilling were dismissed April 24,2012, in accord with a $40,000 settlement. EquitableProduction was granted summary judgment May 17,2012.

A unanimous Fourth Circuit U.S. Court of Appealspanel affirmed summary judgment Oct. 8 for EquitableProduction (Dennis Hagy, et al. v. Equitable Pro-duction Co., et al., No. 12-1926, 4th Cir.; 2013 U.S.App. LEXIS 20478; See 10/15/13, Page 24).

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Warren Drilling filed a claim in November 2010 againstAce American Insurance Co. for coverage and a defensein the Hagy litigation under a commercial general liabi-lity policy it obtained pursuant to the drilling contractwith Equitable Production. Ace American Insurancedenied coverage April 15, 2011. Warren Drilling noti-fied Equitable Production in May 2011 of the denialand asserted an obligation under the March 2006 dril-ling contract to indemnify for all costs of defendingthe Hagy litigation. Equitable Production did not in-demnify Warren Drilling.

In addition to $40,000 for the settlement, Warren Dril-ling seeks to recover $155,000 it alleges it spent defend-ing the Hagy litigation. Warren Drilling settled with AceAmerican Insurance in April 2013. Warren Drilling andEquitable Production filed cross-motions for summaryjudgment in November and October 2013.

3 Issues In DisputePennsylvania law applies under a choice-of-law provi-sion in the March 2006 drilling contract, according toJudge James L. Graham. ‘‘Three distinct issues are indispute here: (1) which party has a right to indemni-fication under the Drilling Contract; (2) whether thatparty must prove that the claim made against it by theHagys was legally valid; and (3) whether its expenses inthe Hagy litigation were reasonable,’’ according toJudge Graham.

Warren Drilling and Equitable Production argue thatthe other party bears the duty to indemnify under thecontract. Equitable Production cites Section 11.5 of thedrilling contract; Warren Drilling cites Section 11.6 ofthe drilling contract.

For Section 11.5 to apply, the contamination mustoriginate on or above the surface or from a liquid orsolid in the control of Warren Drilling, according toJudge Graham. ‘‘The record before the court demon-strates that neither requirement is satisfied.’’

‘‘The court does find as a matter of law that § 11.6applies here,’’ according to Judge Graham. ‘‘Underthis section EQT [Equitable Production] must indem-nify Warren for claims of pollution or contaminationto the extent that they are: (1) ‘not assumed by Cont-ractor [Warren] in Subparagraph 11.5,’ (2) not coveredby Warren’s insurance, and (3) not caused by the neg-ligence or misconduct of Warren or its employees.’’

‘‘None of these limitations come into play here.’’

‘‘EQT argues that even if § 11.6 does apply, Warren isnot entitled to indemnification because Warren has notdemonstrated the validity of the Hagys’ underlyingclaim against Warren,’’ according to Judge Graham.

‘‘Warren contends that the Drilling Contract requiredEQT to defend and indemnify Warren against allclaims, not just claims for which Warren was actuallyliable,’’ according to Judge Graham.

‘Plain Language’‘‘The court finds that the Drilling Contract containsplain language by which EQT’s duty to indemnifywas triggered by the making of a claim for contami-nation against Warren.’’

‘‘To hold otherwise would render § 11.6 meaningless,’’according to Judge Graham.

With respect to the reasonableness of the settlementamount and Warren Drilling’s litigation expenses,Warren Drilling has not met its burden, according toJudge Graham. ‘‘Though it has submitted evidencethat it reached a $40,000 settlement with the Hagys,it has not provided any analysis as why that amountwas reasonable, other than to vaguely assert that atrial would have been expensive. Further, Warren hasmerely alleged that it expended $155,000 in attorneys’fees and costs in connection with the Hagy litigation,without submitting any evidence to substantiate thatamount.’’

‘‘Accordingly, the court will instruct the parties tosubmit additional evidence and briefing on the issuesof the reasonableness of the settlement amount andthe litigation expenses.’’

With respect to the reasonableness of Warren Dril-ling’s request for fees and costs under section 11.6 ofthe drilling contract for the instant litigation, JudgeGraham noted that Equitable Production offered noargument in opposition. ‘‘Accordingly, the court willalso instruct the parties to submit additional evidenceand briefing on the issue of the reasonableness [of]those fees and costs,’’ according to Judge Graham.

Colleen Elizabeth Cook, Daniel Patrick Corcoran andJames Scott Huggins of Theisen, Brock, Frye, Erb &

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Leeper in Marietta, Ohio, represent Warren Drilling.Lyle B. Brown and J. Kevin West of Steptoe & John-son in Columbus represent Equitable Production. Dar-ius N. Kandawalla and Sabrina Christine Haurin ofBailey Cavalieri in Columbus represent Ace AmericanInsurance. �

Pennsylvania Federal JudgeRules Gas Well ActivityDid Not Extend Term Of LeaseWILLIAMSPORT, Pa. — Lycoming County, Pa.,property owners seeking a declaratory judgment againsta natural gas extraction company in the U.S. DistrictCourt for the Middle District of Pennsylvania weregranted summary judgment April 30; the judge con-cluded that the oil and natural gas lease expired underits own terms because the extraction activity occurred onan adjacent property in violation of the unambiguouslease (Thomas A. Neuhard, et uxor v. Range Resources-Appalachia, No. 11-1989, M.D. Pa.; 2014 U.S. Dist.LEXIS 59602).

(Order in Section C. Document #15-140506-053R.)

Range Resources-Appalachia and Thomas and BarbaraNeuhard are litigating whether a five-year oil and nat-ural gas lease executed in June 2006 expired becausea natural gas well was not developed on the surface ofthe Neuhards’ 47-acre property in Lycoming Countyduring the term of the lease.

Notice Of RemovalThe Neuhards filed suit in September 2011 in the Lycom-ing County Court of Common Pleas (No. 11-1738).Range Resources-Appalachia filed notice in October2011 to remove the lawsuit to the Middle District ofPennsylvania.

Summary judgment discovery commenced in February2012 on cross-motions filed by the plaintiffs and RangeResources-Appalachia.

‘‘The Court held oral argument on the motions onMarch 26, 2014,’’ according to Judge Matthew W.Brann. ‘‘There are no material facts in dispute, andthe issues before the Court involve interpretation ofcontract provisions as a matter of law.’’

The disputed oil and natural gas was executed June 21,2006, according to Judge Brann. ‘‘The Lease providedRange the rights to procure oil and gas from forty-seven(47) acres owned by the Neuhards situate[d] in LewisTownship, Lycoming County, Pennsylvania. TheLease contains a primary term of five years calculatedfrom June 21, 2006. Unless extended by the com-mencement of drilling operations or as otherwise pro-vided, the Lease would expire by its own terms on June21, 2011.’’

Range Resources-Appalachia executed a designationof unit document June 13, 2011, creating the NullEugene A Unit, which includes the Neuhards’ tract,according to Judge Brann.

‘‘The language of the Lease, Range’s activities, and thepositions of the parties raise three legal issues,’’ accord-ing to Judge Brann. The issues are whether RangeResources-Appalachia began activities before the leaseexpired, whether the unit created for extractionexceeded the lease and whether drilling a well on theadjacent Null property satisfied the lease, according toJudge Brann.

‘Commencement’‘‘First, did Range’s activities prior to June 21, 2011, theexpiration date of the Lease’s primary term, constitutethe ‘commencement of a well’ as a matter of law?’’

‘‘This Court recently decided this particular issue inRoe v. Chief Exploration & Development LLC [No.11-816, M.D. Pa., Aug. 13, 2013; 2013 U.S. Dist.LEXIS 113914] finding that activity undertaken ingood faith in preparation to drill satisfied a lease’s com-mencement clause,’’ according to Judge Brann.

‘‘Pennsylvania cases adopt this posture as well,’’ accord-ing to Judge Brann.

Range Resources-Appalachia’s activities before June 21,2011, included obtaining permits from governmentagencies, staking a location for a well site, negotiatingwell-drilling operation agreements with the plaintiffsand neighboring land owners, obtaining easements,removing timber and constructing an access road andpad site, according to Judge Brann. ‘‘These activities aresufficient to constitute the commencement as a matterof law. [Pemco Gas Inc. v Bernardi, 1977 Pa. Dist. &Cnty. Dec. LEXIS122, Dec. 30, 1977].’’

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‘‘Even though Range’s activities in beginning the wellon the neighboring Null property satisfied the com-mencement clause as a matter of law, by the terms ofthe Lease those drilling activities must have been per-formed wither ‘on the Leased Properties or on a spacingunit containing a portion of the Leased Properties’ inorder to extend the Lease. Lease § 8.1,’’ according toJudge Brann.

‘‘The concrete issue before the Court is whether Range’sdesignation of a unit of approximately three hundredninety-five (395) acres exceeded its unitization author-ity under the Lease.’’

Unit Size‘‘The Neuhards submit that, by the plain language ofthe lease, the acreage amounts articulated in Section 9.2operate so as to limit the maximum extent of a unit’ssize to the 350 acres surrounding each well, based onthe allusion to section 9.2 in section 12.1,’’ according toJudge Brann.

‘‘The Court holds that Range’s unit designation violatesits unitization authority under the plain and unambig-uous terms of the Lease, because the Lease is clear that aunit cannot be larger than 350 acres surrounding eachwell in the unit, and a unit cannot contain more thanone well without the permission of the Lessor, whichRange did not obtain.’’

‘‘Although Range undoubtedly commenced a well priorto the expiration of the primary term, it did not do so onthe Leased premises, but on a premises adjacent to theLeased Premises that was not unitized according to theLease,’’ according to Judge Brann. ‘‘Under a plain read-ing of the Lease, Range’s activities on the Null Propertyadjacent to the Leased Premises did not constitute dril-ling activities ‘on the Leased Premises.’ Nor was there asufficient modicum of activity in preparation for dril-ling on the Leased Premises during the primary periodto extend the Lease — the operative activity was per-formed on the Null Property.’’

‘‘In sum, Range commenced a well before the expira-tion of the Lease’s primary term,’’ according to JudgeBrann. ‘‘That well, however, was neither ‘on the LeasedPremises’ nor ‘on a unit containing a portion of theLeased Premises.’ Range exceeded its unitizationauthority under the plain and unambiguous languageof the Lease and did not commence a well on the

Neuhard’s property. Consequently, the Lease expiredby its own terms on June 21, 2011.’’

Michael A. Dinges of Elion, Wayne, Grieco, Carlucci,Shipman & Irwin in Williamsport represents the plain-tiffs. Andrew D. Sims and Troy Okruhlik of Harris,Finley & Bogle in Fort Worth, Texas, and J. DavidSmith of McCormick Law Firm in Williamsport repre-sent Range Resources-Appalachia. �

Pennsylvania Federal JudgeDenies Summary JudgmentIn Natural Gas Lease DisputePITTSBURGH — A magistrate judge’s recommen-dation in the U.S. District Court for the Western Dis-trict of Pennsylvania to deny summary judgment in anatural gas lease dispute was adopted April 16 by thepresiding judge over the objection of the defendants,who are accused of allowing the disputed lease toexpire (Rugh A. Mason, et uxor v. Range Resources-Appalachia, et al., No. 12-369, W.D. Pa.; 2-14 U.S.Dist. LEXIS 53195).

(Order available. Document #15-140506-031R.)

Rugh and Sherry Mason sued Range Resources-Appa-lachia and NiSource Energy Ventures in February 2012in the Washington County, Pa., Court of CommonPleas (No. 12-1159) to stop the companies from ob-taining production rights for natural gas under theirland. The defendants removed the declaratory judg-ment lawsuit March 26, 2012, to the Western Districtof Pennsylvania.

Declaratory JudgmentThe plaintiffs seek a declaration that they rather thanthe defendants own all drilling and production rights tothe natural gas associated with the land. The plaintiffsfurther allege that Range Resources-Appalachia inter-fered with Rugh Mason’s relationship with his em-ployer after he refused to amend and ratify a March1961 lease or to enter into a new lease for gas produc-tion rights with the company.

The Masons own 151 acres of a 165-acre tract inWashington County that is the subject of a March22, 1961, lease executed by John Burig, Flora Burig

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and Anna C. Burig with The Manufacturers Light andHeat Co. John and Anna Burig are deceased; it is pre-sumed Flora Burig is also deceased because John, herhusband, was born in 1889. The Masons succeeded toownership of the subject land though Sherry Mason,who has been the owner of the land since at least theexecution of a lease in October 1984 but did not objectto the lease for more than 25 years.

Columbia Gas Transmission and NiSource EnergyVentures have succeeded to the Manufacturers Light’srights under the lease.

The primary term of the lease was 10 years. A provisionof the lease extended the lease as long as the lesseeoperates any portion of the subject land in search ofor by production of natural gas and oil or if the land ispart of a production unit or a natural gas storage field.The lessee is granted in the lease sole authority to deter-mine if the operation satisfies the conditions and if theroyalties paid are adequate compensation.

There is no evidence that the Burigs ever considered thelease forfeited or terminated. Nor is there evidence thatthe Masons have demanded Columbia Gas Transmis-sion or its assignees drill a well on the subject property,according to Jeffrey Kramer, the Range Resources-Appalachia landman responsible for land and leaseacquisitions in Washington County.

Columbia Gas Transmission operates the Donegal Sto-rage Field created by Manufacturers Light and HeatCo., which includes the subject property.

2005 SubleaseColumbia Gas Transmission entered into a subleasein December 2005 with Range Resources-Appalachiapredecessor Great Lakes Energy Partners for gas devel-opment and production rights in the Donegal StorageField except for the sandstone gas storage formation.The sublease includes any rights remaining under the1961 lease.

Columbia Gas Transmission assigned to NiSourceEnergy Ventures in December 2009 all of its rightsand interests as sublessor under the 2005 subleasewith Great Lakes Energy Partners. NiSource EnergyVentures sublet to Range Resources-Appalachia theproduction rights for all formations below the top of

the Rhinestreet formation in the Donegal Storage Fieldpursuant to the gas storage leases, including the 1961lease.

The Masons allege since 1961, no entity has paid anyconsideration for oil and natural gas productionsrights that may still exist under the 1961 lease. Theyalso allege neither Great Lakes nor Range Resources-Appalachia has paid royalties or other considerationexcept for delay rental paid in 2007.

Meanwhile, Range Resources-Appalachia has begunoperations within the Donegal Storage Field and as ofJan. 7, 2014, placed approximately 53 natural gas wellsinto production.

Magistrate Judge Robert C. Mitchell issued a reportand recommendation Feb. 26 to deny the plaintiffs’Dec. 23, 2013, motion for summary judgment inpart. The plaintiffs argue the payment of delay rentalcannot, as a matter of Pennsylvania law, extend thelease beyond its primary term, according to MagistrateJudge Mitchell. ‘‘Plaintiffs have presented no evidenceof abandonment, and the equitable defenses of laches,waiver and estoppel raise fact issues for trial,’’ accordingto Magistrate Judge Mitchell.

Joint ObjectionThe defendants filed a joint objection March 12.

Judge Joy Flowers Conti adopted the report and re-commendations on April 16. ‘‘In their objections,Defendants contend that the magistrate judge in theR&R [report and recommendations] erroneously con-cluded that there are genuine issues of material facton the issue of severability of the gas production rightsand storage rights by reason of: (i) the lease’s assign-ment clause; (ii) production rights under the leasebeing subleased to Range Resources, and the subleasebeing subsequently assigned to NEVCO [NiSourceEnergy Ventures]; and (iii) Range Resources’ consum-mation of a ‘top lease’ with Plaintiffs in 2007,’’ accord-ing to Judge Conti.

Contrary to the defendants, ‘‘[t]he R&R did not reachany conclusion with respect to the issue of severability,’’according to Judge Conti. ‘‘The R&R merely notedthat, although Defendants had argued that dual pur-pose leases in general appear compatible with thenotion of severability of storage and production rights,

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Defendants had not discussed the assignment clausein the lease, the history of the separate assignmentsof the production rights or the lease consummatedwith Plaintiffs in 2007.’’

‘‘It is noted that, had Defendants’ wished to file amotion for summary judgment arguing that theywere entitled to judgment as a matter of law on thequestion of who owns the product rights to the naturalgas reserves on Plaintiffs’ land, they could have doneso,’’ according to Judge Conti. ‘‘Because they chose notto file a motion, the magistrate judge in the R&Rmerely pointed out an issue that remains to be resolvedat trial.’’

The plaintiffs of Claysville, Pa., are pro se. Laura A. Langeand Paul K. Stockman of McGuireWoods in Pittsburghand James W. Pfeifer of Pepper Hamilton in Pittsburghrepresent Nisource Energy Ventures. Donald T. DulacJr. and Kenneth J. Witzel of Barnes Dulac Watkins inPittsburgh represent Range Resources-Appalachia. �

April Trial Stayed PendingDispositive Motion RulingIn Pennsylvania Federal CourtWILLIAMSPORT, Pa. — Natural gas operatorssued in the U.S. District Court for the Middle Districtof Pennsylvania filed a supplemental authority on April28 in support of dismissing a strict liability claim as amatter of law; the trial anticipated to start April 21 wasstayed in March pending a ruling on dispositive defensemotions (Edward E. Kamuck v. Shell Energy Holdings,et al., No. 11-1425, M.D. Pa.).

(Motion for stay available. Document #94-140513-028M. Supplemental authority available. Document#94-140513-029B.)

Edward Kamuck owns 93 acres that were once partof the Copp property in Tioga County, Pa. The entiretract was subject to an oil and gas lease, according to therecord. The original Copp lease did not address theextraction of natural gas from Marcellus Shale forma-tions, however, according to the record.

Lease HoldersShell Holdings GP, Shell Holdings LP and Shell Wes-tern Exploration & Production were lessees under the

Copp lease and in 2010 sought to expand their mineralrights to include Marcellus Shale natural gas extraction,according to the record.

Kamuck declined to amend the Copp lease, but theother owners agreed, according to the record. The ori-ginal 10-year lease on Kamuck’s property expired June12, 2011, according to the record.

After the defendants commenced natural gas extractionon the adjoining land, Kamuck sued. In the complaintfiled in August 2011, Kamuck sued for breach of con-tract, a declaratory judgment against the companies forhydraulic fracturing and for damages in torts.

The defendants moved to dismiss under Federal Ruleof Civil procedure 12(b)(6) for failing to state a claimand to strike the claims under Rule 12(f). The motionwas granted in part in April 2012, leaving only privatenuisance, negligence and strict liability causes of action.

The defendants on Jan. 17, 2014, moved to dismissthe remaining claims pursuant to Federal Rule of CivilProcedure 41(b) for failure to prosecute or, alterna-tively, for summary judgment. In support of thismotion, the defendants filed a supplemental authorityon April 28 from Ely v. Cabot Oil & Gas (No.0902284, M.D. Pa.). ‘‘On April 23, 2014, JudgeJohn E. Jones, III issued an Order adopting this Court’sReport and Recommendation in its entirety, grantingsummary judgment in favor of the defendants in thatcase on the issue of strict liability,’’ according to thedefendants.

‘‘The issue of whether Defendants natural gas drillingoperations are subject to strict liability was briefedby the parties in the instant case, and the Defendantsrelied specifically upon the analysis contained in thisCourt’s Report and Recommendation in the Ely mat-ter,’’ according to the defendants.

Strict LiabilityMagistrate Judge Martin C. Carlson issued the reportand recommendation on April 21, according to thedefendants. Magistrate Judge Carlson ruled as a matterof law, natural gas drilling activities are not subject tostrict liability, according to the defendants.

Meanwhile, the defendants filed an unopposed motionon March 19 to stay the trial set to begin April 21.

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Citing the Rule 41(b) motion to dismiss or, in thealternative, for summary judgment, the defendantsargue that a ruling on the motion could resolve allthe remaining issues in their favor.

‘‘Without knowing the outcome of the pending Dis-positive Motion, it is extremely difficult for the partiesto prepare intelligently and efficiently for the impend-ing trial, should any claims survive the DispositiveMotion,’’ according to the defendants.

The stay entered March 19 applies not only to the trial,but also to pending motions in limine and pretrial brief-ing deadlines.

Alan S. Fellheimer of Fellheimer & Eichen in Philadel-phia and Judith E. Fellheimer of Fellheimer, Eichen &Braverman in Philadelphia represent Kamuck. StefanieA. Lepore and Jeremy A. Mercer of Fulbright & Jaworskiin Canonsburg, Pa., and William D. Wood of Ful-bright & Jaworski in Houston represent the defendants. �

March 2015 Royalty Trial SetIn Arkansas; Some ClaimsDismissed In January OrderLITTLE ROCK, Ark. — A putative class action filedin the U.S. District Court for the Eastern District ofArkansas seeking recovery of royalties from a naturalgas company is scheduled for trial in March 2015;certain of the causes of action were dismissed in January2014 for failure to state a claim (Joe Rath, et al. v. BHPBilliton Petroleum (Arkansas) Inc., et al., No. 13-602,E.D. Ark.).

(Scheduling order available. Document #94-140513-005R. Brief in support of motion to dismiss classclaims available. Document #94-140513-006B. Ordergranting in part motion to dismiss available. Docu-ment #94-140513-007R.)

Joe Rath filed a class action complaint in October 2013against BHP Billiton Petroleum (Arkansas) Inc., BHPBilliton Petroleum (Fayetteville) Inc. and BHP BillitonPetroleum Marketing Inc. Rath alleges that the defen-dants engaged in deceptive or fraudulent practices todeprive him and a putative class of royalties owed underan oil and natural gas lease.

Class DefinitionsThe defendants are operators and working interestpartners who depend on well operators to provide thenames of leasors to whom royalties are owed, accordingto Rath. Rath proposes a class of mineral interest own-ers who are owed royalties by the defendants as opera-tors (Class I) and a class of mineral interest owners whoare owed royalties by the defendants as working interestpartners (Class II).

Rath avers that the defendants are liable under theoriesof fraud, constructive fraud and fraudulent conceal-ment; breach of contract; violation of the ArkansasDeceptive Trade Practices Act (Arkansas Code Anno-tated Sections 4-88-107[a][1], [8], [10] and [b]);breach of statutory duty of prudent good faith operator(Arkansas Code Annotated Section 15-73-207); unjustenrichment; conversion; civil conspiracy; and equitableaccounting.

Rath alleges that the defendants improperly deductpost-production expenses from royalties, fail to payroyalties as required by the leases, pay for volumesless than actually metered and conceal from royaltyowners that royalties are paid on the volume sold ratherthan the volume produced.

Rath seeks disgorgement, treble damages, compensa-tory and punitive damages, a declaratory judgmentwith respect to underpayment of royalties and a per-manent injunction against future underpayment ofroyalties.

The motion for class certification is due by Oct. 22,pursuant to the case management order enteredFeb. 27. A trial before Judge Brian S. Miller is sched-uled for March 16.

The defendants on May 8 moved to dismiss and tostrike the class of mineral owners in which the defen-dants are not operators (Class II). Rath alleges member-ship in Class I, according to the defendants.

Working Interest Class‘‘Nowhere does he allege that he is an integrated mineralinterest owner in a section in which BHP is a non-operating working interest party,’’ according to thedefendants. ‘‘As such, Mr. Rath cannot meet the firstqualification of class representation — being a memberof the class — as to Class II. Conversely, Class II hasbeen pleaded without any class representation.’’

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‘‘Because Mr. Rath’s Complaint contains allegations onbehalf of a class without proper representation andcannot be certified, BHP respectfully requests thatthe Court strike all allegations pertaining to Class IIpursuant to [Federal Rule of Civil Procedure] Rule23(d)(1)(D).’’

The causes of action alleged against the defendants werelimited by Judge Miller in a Jan. 16 order dismissing theprudent operator, unjust enrichment, equitable ac-counting and civil conspiracy claims. The defendantsmoved to dismiss on Dec. 4.

Rath sufficiently pleaded the alleged violations of theArkansas Deceptive Trade Practices Act and fraud, con-structive fraud and fraudulent concealment claims,according to Judge Miller. ‘‘Here, Rath sets forth spe-cific factual allegations that BHP engaged in fraudulentconduct,’’ according to Judge Miller.

‘‘BHP’s motion to dismiss Rath’s breach of contractclaim is denied because Rath has set forth sufficientallegations in support of his claim that BHP breachedthe lease by failing to properly pay royalty owners.’’ Bythe same reasoning, Rath’s claim for treble damagesunder Arkansas Code Annotated Section 15-74-708survives the motion to dismiss, according to JudgeMiller.

The motions to dismiss the request for injunctive reliefand damages under the theory of conversion are alsodenied, according to Judge Miller. ‘‘Rath has pled suffi-cient facts to support a claim that BHP has improperlycalculated and paid royalties and should therefore beenjoined from doing so in the future.’’

Conversion Dismissed‘‘BHP’s motion to dismiss the conversion claim is alsodenied because Rath’s allegations that BHP convertedfunds owed to royalty owners are sufficient to overcomea motion to dismiss,’’ according to Judge Miller.

‘‘BHP’s motion to dismiss Rath’s claim under the prudentoperator standard is granted,’’ according to Judge Miller.‘‘Although Rath alleges that BHP violated the prudentoperator standard in performing the lease obligations,these allegations are essentially part of Rath’s breach ofcontract claim and not a separate cause of action.’’

Rath’s unjust enrichment claim fails because Rath doesnot plead facts to support the conclusion the contract

between the parties is not legal or binding, accordingto Judge Miller. ‘‘The doctrine of unjust enrichmentgenerally does not apply where there is a binding, legalcontract.’’

Equitable accounting is a remedy available only whenthere is no remedy available at law, according to JudgeMiller. ‘‘Rath has not alleged or shown in any way thatthe accounts are so complicated that they can only besorted by a court in equity,’’ according to Judge Miller.‘‘Therefore, this claim is dismissed.’’

Rath fails to state a claim for civil conspiracy, accordingto Judge Miller. ‘‘Here, Rath simply states in a singlesentence that defendants are affiliate companies thatacted in concert to deprive him of royalties. This con-clusory statement is insufficient to support a plausibleclaim or to withstand a motion to dismiss.’’

Charles R. Hicks of Little Rock and Keith L. Graysonof Grayson & Grayson in Heber Springs, Ark., repre-sent Rath. John F. Peiserich, Julie DeWoody Great-house and Kimberly Logue of Perkins PeiserichGreathouse Morgan Rankin in Little Rock representthe defendants. �

Gas Well Operator ObjectsTo Order Denying DismissalIn Texas Federal CourtFORT WORTH, Texas — XTO / Exxon EnergyInc. filed objections April 29 to an order denying itsmotion to dismiss a lawsuit in the U.S. District Courtfor the Northern District of Texas seeking $9 millionfor wrongful death and property damage allegedlycaused by the release of chemicals used in hydraulicfracturing to complete natural gas wells; the orderwas entered April 15 by a magistrate judge (DanielW. Nicholson v. XTO / Exxon Energy Inc., No. 13-899, N.D. Texas).

(Order available. Document #94-140513-002R.Objection available. Document #94-140513-003B.)

Daniel Nicholson filed the lawsuit in November 2013.XTO filed a motion to dismiss on Jan. 6, which Magis-trate Judge Jeffrey L. Cureton denied Feb. 3. Magistrate

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Judge Cureton granted Nicholson leave to amend byFeb. 24 to cure defects in the complaint.

Amended ComplaintNicholson filed an amended complaint on Feb. 21alleging negligence for wrongful death, gross negligenceand property damage for failing to protect Vera Nichol-son, his mother, from the effects of drilling and compres-sion venting near his mother’s residence in Arlington,Texas. Nicholson also alleges that his brother, sister andher children, who also live in the mother’s residence,were exposed to the chemicals.

‘‘Defendant[s] knew they were creating a high degreeof risk and were indifferent to the precautions to elim-inate this risk,’’ according to Nicholson. ‘‘This recklessdisregard and breach of duty has taken the life of plain-tiff’s mother, Vera Nicholson.’’

XTO argued in the motion to dismiss filed March 7that the amended complaint does not cure the defectsidentified by Magistrate Judge Cureton.

‘‘In the amended complaint, Nicholson claims that‘Defendant XTO/Exxon Energy Inc. failed in theduty to protect Vera Nicholson[,] Plaintiff’s Motherand family from effects coming from close proximityof drilling and compression venting operations,’ ’’according to Magistrate Judge Cureton. ‘‘In additionaldocuments attached to the amended complaint, Plain-tiff alleges claims of negligence and gross negligenceagainst Defendants, setting forth various facts in sup-port of his claims.’’

To survive a motion to dismiss for failing to state aclaim pursuant to Federal Rule of Civil Procedure12(b)(6), the plaintiff must state a claim that is plausibleon its face, and the allegations must raise a right of reliefabove the level of speculation (Bell Atlantic Corp. v.Twombly, 550 U.S. 544, 555, 570 [2007]; Ashcroft v.Iqbal, 566 U.S. 662, 678 [2009]), according to Magis-trate Judge Cureton.

‘Not Convinced’‘‘Based on a review of the Plaintiff’s amended complaintand attached documents, all of which comprise thePlaintiff’s amended complaint, the Court is not con-vinced at this early juncture that Plaintiff can prove noset of facts that would entitle him to relief. Conse-quently, the Court concludes that Defendant’s Motion

to Dismiss Plaintiff’s Amended Complaint should beDENIED. In addition, the Court concludes thatDefendant’s Motion to Stay Discovery should alsobe DENIED.’’

In the objection filed April 29, XTO notes it has notconsented to the referral of the case to Magistrate JudgeCureton. ‘‘Pursuant to 28 U.S.C. § 636 [28 U.S. CodeSection 636], a motion to dismiss for failure to state aclaim may only be decided by a magistrate judge withthe consent of the parties,’’ according to XTO. ‘‘Where,as here, all parties have not consented to the transferof the lawsuit to a magistrate judge for all purposes, themagistrate judge is limited to entry of a report andrecommendation to the Article III judge. Accordingly,the Magistrate Judge’s Order denying XTO’s Motionto Dismiss for Failure to State a Claim should be treatedas a report and recommendation and reviewed by theCourt de novo.’’

The amended complaint should be dismissed on themerits, according to XTO. ‘‘The Amended Complaintis replete with conclusory, unsubstantiated allegationsthat XTO caused or contributed to the death of VeraNicholson.’’

‘‘Plaintiff must do more than generally allege thatXTO’s operations resulted in injury to Ms. Nicholson.Plaintiff does not allege what operations were per-formed in a manner contrary to the standards of areasonably prudent operator under the same or similarcircumstances, how such operations deviated from thestandards of a reasonably prudent operator, how any‘chemicals’ or ‘silica’ allegedly utilized in hydraulicfracturing operations approximately a mile below thesurface of the earth could have resulted in Ms. Nichol-son’s death, or how any ‘compressed gas operations’resulted in Ms. Nicholson’s death.’’

‘Legal Duty’

‘‘In Texas, an actionable claim for negligence requiresproof of a legal duty owed by Defendant to the Plaintiff,a breach of that duty, and damages proximately result-ing from that breach. Lane v. Halliburton, 529 F.3d548, 565 (5th Cir. 2008). A claim for gross negligencerequires further proof of ‘an extreme degree of risk’ and‘conscious indifference to that risk.’ Id. (citing Mobil OilCorp. v. Ellender, 968 S.W.2d 917, 921 (Tex. 1998)),’’according to XTO.

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‘‘Given the absence of any factual, nonconclusory alle-gations to support the claim, Plaintiff is inviting theCourt to infer that the alleged injuries possibly resultedfrom some wrongful act or omission of Defendant. Yet,such an invitation to infer the possibility of wrongfulconduct is insufficient to state a plausible claim forrelief.’’

‘‘The Court should not adopt the Magistrate Judge’sOrder because the Amended Complaint does not con-tain sufficient factual allegations to state a plausibleclaims for relief,’’ according to XTO.

Nicholson of Phoenix is pro se. Matthew S. Wolcottof XTO in Fort Worth and Jon-William NathanielJones and Andrew D. Sims of Harris, Finley & Boglein Fort Worth represent XTO. �

Gas Well Operators Seek OrderTo Support Claims BeforeSummary Judgment DiscoveryWILLIAMSPORT, Pa. — Natural gas extractioncompanies accused of contaminating water wells innorthern Pennsylvania filed a reply April 8 in supportof a case management order requiring the plaintiffs ina lawsuit removed Jan. 28 to the U.S. District Court forthe Middle District of Pennsylvania to make a primafacie case for their claims before the beginning of dis-covery; the plaintiffs responded March 25 to themotion filed March 12 (Sheila Russell, et al. v. Chesa-peake Appalachia, et al., No. 14-148, M.D. Pa.).

(Brief in support of Lone Pine order available. Docu-ment #94-140513-023B. Response to motion forLone Pine order available. Document #94-140513-024B. Reply in support of Lone Pine order available.Document #94-140513-025B.)

Chesapeake Appalachia and Nabors Completion &Production Services Co., incorrectly named as SuperiorWell Services Inc. in the complaint, filed a joint noticeof removal Jan. 28 in the lawsuit filed Dec. 27 in theDauphin County Court of Common Pleas (No. 13-11291) by Sheila Russell and 16 other plaintiffs forcontamination of their domestic water wells in Brad-ford Co., Pa.

Causes Of ActionThe plaintiffs aver they are the owners of recreationalproperty, certified organic farms and residences inBradford County. The plaintiffs allege property dam-age and personal injuries and seek to recover compen-satory and punitive damages under theories of privatenuisance, negligence, negligence per se and private tem-porary nuisance.

Chesapeake Appalachia and Nabors Completion fileda joint motion March 12 for a case management ordermodeled on Lore v. Lone Pine Corp. (1985 N.J. Super.LEXIS 1626). Federal district courts have broadauthority under Federal Rule of Civil Procedure16(c)(2)(L) ‘‘to ‘[adopt] special procedures for mana-ging potentially difficult or protracted actions thatmay involve complex issues, multiple parties, difficultlegal questions or unusual proof problems,’ ’’ accordingto the defendants. ‘‘It is from this language that a districtcourt’s authority to issue Lone Pine orders is derived.Roth v. Cabot Oil & Gas Corp., 287 F.R.D. 293, 298(M.D. Pa. 2012).’’

The claims in the instant complaint have been verifiedonly by Carol French, who resides on one of the subjectproperties, according to the defendants. ‘‘Although shemay be competent to verify the Complaint on behalfof Claude and Lynsey Arnold, who also reside on thatproperty, there are not facts pled indicating that shepossesses the requisite personal knowledge or infor-mation and belief to verify the allegations of the remain-ing plaintiffs. There is also no evidence in the recordthat any of the other plaintiffs endorsed the facts.Because only Carol French was willing to verify themost basic facts, Plaintiffs should be required to setforth proof that the factual and legal allegations intheir complaint are supportable.’’

‘‘Defendants respectfully request that this Court orderPlaintiffs to provide: (1) the identity of the ‘toxic and/orradioactive substances’ each Plaintiff was exposed to,the dates of exposure, and the amount of each chemicalto which Plaintiffs were exposed; (2) the precise diseaseor illness from which Plaintiffs suffer; (3) evidence sup-porting causation between Defendants’ actions and theinjuries in question; and (4) a description of the dam-ages to land each Plaintiff sustained, the dates of dam-age, and evidence Defendants caused the damage.’’

Lone PineThe plaintiffs aver in the response filed March 25 theinstant case is distinguishable from Lore v. Lone Pine.

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‘‘In Lone Pine, plaintiffs brought suit against 464 defen-dants who were involved in the management of a land-fill and the generation and hauling of toxic waste.Plaintiffs’ claims were for damage to property and var-ious personal injury claims based on water contami-nation. When the court entered its famous order,plaintiffs’ case had been on file for nine months. Inthat time plaintiffs had only served a handful of defen-dants and had failed to identify through discoverywhich defendants were responsible for which harms.Additionally, defendants had presented the court withstudies conducted by the EPA which cast serious doubton plaintiffs’ claims of pollution damage.’’

‘‘Plaintiffs’ case does not provide any of the circum-stances warranting entry of a Lone Pine order,’’ accord-ing to the plaintiffs. ‘‘Plaintiffs’ case has only just begun,there is no cause to regard Plaintiffs’ claims as dubiousat this point, and it is not a case for complicated medicalclaims or property valuations. Despite Defendants’ mis-leading arithmetic and creative summarization of Plain-tiffs’ Complaint, Plaintiffs present straightforward andproperly pleaded claims sounding in simple nuisance,negligence, and negligence per se. As such, there is nojustification for subjecting Plaintiffs to a standardbeyond that required under the Federal Rules of CivilProcedure.’’

In the reply filed April 8, the defendants argue that theplaintiffs failed to address the grounds cited for entryof a Lone Pine order, including misjoinder. In theirresponse, the plaintiffs abandoned their claims for med-ical damages, according to the defendants. ‘‘Althoughdiscovery into medical issues is now unnecessary in thiscase, a Lone Pine case management order is still appro-priate to address the myriad of other discovery issuesresulting from Plaintiffs’ misjoinder.’’

Improper Joinder‘‘Recognizing the complex factual, legal and discoveryissues that arise when multiple plaintiffs are improperlyjoined in a single action when their claims do not ariseout of the same transaction, occurrence, series of trans-actions or occurrences, or do not present a commonquestion of law or fact, Defendants sought an ordergranting a Motion for Severance and requested thisCourt sever the cases in the same manner Plaintiffsset forth their allegations in the Complaint — byhousehold,’’ according to the defendants. ‘‘If thisCourt is not inclined to grant the Motion for Severance,

Defendants argue, in the alternative, that a Lone Pinecase management order is necessary to handle the com-plex issues in this case.’’

‘‘Each of the 8 households claims exposure to differentcombinations of wells, and some families complain ofinjuries arising from as many as 13 wells,’’ according tothe defendants. ‘‘Plaintiffs’ complaint alleges 101 waysDefendants’ actions interfered with Plaintiffs’ use andenjoyment of land, including allegations of wells withintegrity issues, leaking or releasing natural gas andother toxic and/or radioactive substances into the air,ground, and waterways; damages to land, excessivenoise; excessive lights; releases of silica and otherdusts; releases of methane; excessive traffic; excessiveand offensive odors; and the very ambiguous ‘hostileand harassing environment. Assuming these allegationsare true, each household’s use and enjoyment wasuniquely affected by Defendants’ activities, becausePlaintiffs own or live on 8 non-contiguous tracts oflane (located in 3 townships) and each parcel of landwas affected by different well sites and has its ownunique topography and characteristics (varying in size,landscape, geological features, structures, access toroads, and proximity to water).’’

‘‘Plaintiffs also assert that they sustained 156 harms,including economic losses, damages to property, perso-nal injuries, and any combination of the like,’’ accord-ing to the defendants.

Amend Complaint‘‘Despite Defendants drawing Plaintiffs’ attention to theseproblems, Plaintiffs have not yet sought to amend theircomplaint, agreed to severance, or agreed to the proposedcase management order.’’

‘‘For the above mentioned reasons, and those discussedin the Brief in Support of the Motion for Lone PineCase Management Order, this Court must grantDefendants’ Motion for Lone Pine Case ManagementOrder.’’

Edward J. Ciarimboli and Clancy Boylan of Fellerman& Ciarimboli in Kingston, Pa., and Charles F. Speer,Peter B. Bieri and Andrew R. Klonowski of Speer LawFirm in Kansas City, Mo., represent the plaintiffs.Michael P. Leahey of Jackson Kelly in Pittsburgh rep-resents Chesapeake Appalachia. Daniel R. Michelmoreof Jackson Kelly in Pittsburgh represents Superior WellServices. �

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Discovery Dispute ReportedBy Oilfield Well OperatorsIn Arkansas Injection SuitLITTLE ROCK, Ark. — Natural gas extraction com-panies sued in the U.S. District Court for the EasternDistrict of Arkansas by Faulkner County, Ark., couplesalleging property damage from hydraulic fracturingwaste disposal in injection wells filed a status reporton May 5 describing Phase 1 discovery disagreementswith respect to the plaintiffs’ requests for seismic dataand depositions of corporate representatives (BobbieHill, et al. v. Southwestern Energy Co., No. 12-500,E.D. Ark.).

(Amended class action complaint available. Docu-ment #94-140513-001C. Status report available.Document #94-140513-010R. Order available. Docu-ment #94-140513-011R.)

Bobbie and Gwenna Hill and Joseph and CatherineSmith filed the putative class action on Aug. 10,2012. They initially alleged claims against only South-western Energy Co., the operator of the so-calledUnderwood injection well. The plaintiffs added Che-sapeake Energy and XTO Energy plus 11 plaintiffs inan amended complaint filed in October 2012; the com-plaint was dismissed in part on Sept. 26, 2013 (2013U.S. Dist. LEXIS 139917).

DefendantsThe plaintiffs filed a second amended class action com-plaint on Jan. 10, 2014. The defendants joined in theamended complaint are Southwestern Energy, its sub-sidiary SEECO Inc., Chesapeake Energy and XTOEnergy. The plaintiffs name the Hills and Smiths, sixadditional couples, a living trust and four individuals asclaimants in the amended complaint.

Southwest Energy and SEECO operate the so-calledUnderwood and Griffin Mountain Nos. 1 and 2, andCampbell injection wells, according to the plaintiffs.Chesapeake Energy operates the Cotton Hill (SRE 8-12) and Trammel injection wells, according to theplaintiffs. XTO Energy operates the Ferguson injectionwell, according to the plaintiffs.

The fracking fluid used to finish a well by hydraulicfracturing is described by the Arkansas Oil and Gas Com-mission (AOGC) as a mixture of water and substances

including formaldehyde, hydrochloric acid, distillates ofpetroleum, ethylbenzene, benzyl chloride, tirehanolamne,ethylene glycol, 1,2,4 trimethylbenzene, ammoniumchloride, magnesium hydroxide, potassium hydroxide,divinylbenzene, light aromatic naphtha, methanol, isopro-nanol, oxyalkylated alcohol, akyl dimethyl benzyl ammo-nium chloride, ammonia, mineral oil, naphthalene,ethoxylateed alchohol and vinyl copolymer, accordingto the plaintiffs. Some 10 percent of the fracking fluidflows back to the surface as waste, which the defendantsinject into vertical waste wells.

The plaintiffs propose a class comprising the residentsand property owners within three miles of disposalwells operated by the defendants in Arkansas. Undertheories of trespass, unjust enrichment and intentionaland reckless conduct, the plaintiffs seek an injunctionordering the defendants to monitor waste well fluidmigration, replevin of all profits derived by the defen-dants and $2 million in compensatory and $15 millionin punitive damages for each property of the namedplaintiffs.

Reckless ConductJudge D.P. Marshall Jr. entered an order on Feb. 14granting in part a motion to dismiss the amended classaction complaint filed by the defendants. The inten-tional and reckless conduct claim is dismissed becauseit was filed without authorization of the court, accord-ing to Judge Marshall.

In addition, the claim fails because it appears to bebased on Arkansas Code Annotated Section 15-73-207, the statute obliging prudent and reasonable opera-tion of wells, according to Judge Marshall. ‘‘This is akinto the duty implied in all contracts to do things onepromised fairly and in good faith. No stand-alone claimexists.’’

In addition, the intentional and reckless conduct claimis duplicative of the trespass claim, according to JudgeMarshall. The plaintiffs may use the evidence of allegedintentional and reckless conduct in support of the claimfor punitive damages. ‘‘Those allegations, though, arenot accepted as a belated new claim. About eighteenmonths in, we’ve finally got this lawsuit focused. Itneeds to stay focused,’’ according to Judge Marshall.

The defendants filed a status report on May 5, but theywere unable to reach a consensus with the plaintiffs.

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‘‘Plaintiffs provided their proposed changes to the draftJoint Status Report on May 5, 2014, and insertedPlaintiffs’ position on the status of discovery whichraised new arguments including individualized argu-ments about each Defendant,’’ according to the defen-dants. ‘‘Given the breadth and nature of Plaintiffs’changes to the format and substance of the Report,the Parties were unable to reach an agreement on aJoint Status Report and Defendants did not have anopportunity to consider and respond to the argumentsraised by Plaintiffs in advance of the Court’s deadline.’’

Rule 26(a)(1) Disclosures

The first phase of discovery is limited to the migrationof waste fluid to the subsurface strata of the plaintiffs’real property, according to the defendants. The partiesmade Federal Rule of Civil Procedure Rule 26(a)(1)initial disclosures on Nov. 15, 2013. The plaintiffshave not produced any documents for Phase 1 discov-ery, according to the defendants.

The defendants object to the April 17, 2014, requestby the plaintiffs for seismic data on the grounds that itis proprietary and outside the scope of the Dec. 19status report and conference. ‘‘Plaintiffs have alreadyreceived ample geologic information,’’ according tothe defendants.

‘‘The scope of Phase 1 discovery regarding geologicinformation is, and should remain, limited to the sub-surface geology of the injection wells, for which Defen-dants have produced responsive information.

‘‘A fishing expedition of Defendants’ highly confiden-tial information that has no bearing on the Phase 1 issueis simply not appropriate,’’ according to the defendants.

No depositions have occurred, according to the de-fendants. ‘‘The parties have a dispute over the scopeof depositions allowed in Phase 1.

‘‘In total, Plaintiffs’ omnibus April 28, 2014 depositionrequest would result in more than 30 depositions inPhase 1 of this action alone,’’ according to the defen-dants. ‘‘Those depositions would take several monthsto conduct given the number of Defendants and thevarious locations of the individuals listed in the De-fendants’ Initial Disclosures. Plaintiffs’ overly broad

request is contrary to their recognition, as evidencedby their Rule 26(f) Report, that the scope of discoveryrequired in Phase 1 is narrow. The number of deposi-tions necessary and the scope of the testimony in Phase1 is similarly limited.’’

Counsel

John R. Holton and Timothy R. Holton of DealCooper Holton in Memphis, Tenn., and Michael P.McGartland of McGartland & Borchardt in FortWorth, Texas, represent the plaintiffs.

Michele R. Blythe and Michael D. Morfey of An-drews Kurth in Houston and R. Scott Morgan, G.Alan Perkins and James D. Rankin III of PPGMRLaw in Little Rock represent Southwestern Energyand SEECO. Adria W. Conklin and Lyn PeeplesPruitt of Mitchell, Williams, Selig, Gates & Woodyardin Little Rock and Michelle P. Cullen of ChesapeakeEnergy in Oklahoma City represent ChesapeakeEnergy. Andrew D. Sims, Russell R. Barton andMichael V. Fitzpatrick of Harris, Finley & Bogle inFort Worth, Texas, and Robert M. Honea of Hardin,Jesson & Terry in Fort Smith, Ark., represent XTOEnergy. �

New Mexico Property OwnersAmend Complaint In SuitChallenging Fracking BanALBUQUERQUE, N.M. — New Mexico prop-erty owners and a hydrocarbon extraction trade groupseeking a declaratory judgment against Mora County,N.M., officials in the U.S. District Court for the Dis-trict of New Mexico for violating their constitutionallyprotected civil and property rights by the enactmentof a ban on hydraulic fracturing and hydrocarbonextraction filed an amended complaint Jan. 10; a casemanagement order filed March 20 includes a February2015 deadline for the parties to submit a consolidated,final pretrial order (Mary L. Vermillion, et al. v. MoraCounty, N.M., et al., No. 13-1095, D. N.M.).

(Case management order available. Document #94-140513-031R. First amended complaint available.Document #94-140513-032C.)

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Mary L. Vermillion, JAY Land Ltd. Co., Yates RanchProperty and the Independent Petroleum Associationof New Mexico seek declaratory and injunctive reliefagainst Mora County and county officials for the en-actment of Mora County Ordinance 2013-01, whichprohibits all hydrocarbon extraction in the county. Inthe lawsuit filed in November 2013, the plaintiffsallege that the ordinance violates their civil rightsunder the U.S. and New Mexico constitutions.

County Ordinance

The Mora County Board of Commissioners adoptedthe Mora County Community Water Rights & LocalSelf-Government Ordinance on April 29, 2013, (Ord.2013-01) to prevent the development of oil and naturalgas reserves, to ban hydraulic fracturing and to elimi-nate the constitutional rights and privileges of corpora-tions, according to the plaintiffs.

The ban is a violation of the U.S. Constitution 14thAmendment due process clause, the Fifth Amendmenttaking clause and the First Amendment guarantee ofthe exercise of speech, of the press, of assembly and topetition government for the redress of grievances,according to the plaintiffs.

The plaintiffs aver that they own mineral estates inMora County and that the ordinance prevents themfrom leasing their minerals to a corporation for thepurpose of oil and natural gas extraction.

‘‘The Ordinance does not serve a compelling state in-terest,’’ according to the plaintiffs. Contrary to the pre-amble of the ordinance, the purpose is to prevent thelawful development of oil and natural gas reserves andto ban hydraulic fracturing.

‘‘If Defendants’ true goal was to protect surface andgroundwater supplies within the County, the Ordi-nance would address other industries that are knownsources of water pollution such as the agriculture in-dustry,’’ the plaintiffs say.

‘‘Even if the goal of protecting water sources is takenas sincere and found to be sufficiently compelling, theblanket elimination of the First and Fifth Amendmentrights of corporations engaging or seeking to engage inactivities prohibited by the Ordinance is not narrowly

tailored to achieving that interest,’’ according to theplaintiffs. Nor is it rationally related to the state interestof protecting water sources.

Preemption

The plaintiffs also aver that the ordinance is invalidbecause it is preempted by New Mexico statute.‘‘Under the Enabling Act of 1910, the New MexicoConstitution, and the statutes based thereupon, theCommissioner of Public Lands has the authority andduty to lease and sell State lands, including issuing oiland gas leases, for the benefit of the common schools,other educational institutions, and other worthy statefunctions that benefit less fortunate citizens of the Stateof New Mexico,’’ they say.

The New Mexico Oil and Gas Act (New Mexico Sta-tutes Sections 70-2-4 and 70-2-5) confers authorityover oil and natural gas extraction to the Oil Conserva-tion Commission and Oil Conservation Division,according to the plaintiffs. ‘‘This authority includesthe ability to enact rules to ‘protect fresh water, publichealth, safety and the environment.’ N.M. Code R.[New Mexico Code Revised] § 19.15.39, and to ‘estab-lish safety procedures for drilling and production of oiland gas wells.’ N.M. Code. R. § 19.15.10.6.’’

The parties consented in February to have MagistrateJudge Carmen E. Garza conduct dispositive proceed-ings. Other matters are referred to Magistrate JudgeGregory B. Wormuth.

Magistrate Judge Wormuth issued an order March 20setting pretrial deadlines and a briefing schedule. Dis-covery is to be completed by Nov. 13, according toMagistrate Judge Wormuth. The plaintiffs have untilJune 16, 2014, to identify experts; all other parties haveuntil July 16 to identify experts.

Summary JudgmentMotions for summary judgment from the plaintiffs aredue Nov. 13 and from the defendants by Dec. 15.Responsive and reply briefing from the plaintiffs isdue Jan. 15 and on Feb. 15 from the defendants.

The plaintiffs are to submit a final pretrial order byJan. 18 to the defendants, according to MagistrateJudge Wormuth. The defendants have until Feb. 11to file with the court a final, consolidated pretrial order.

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Andrew J. Cloutier of Hinkle, Hensley, Shanor & Mar-tin in Roswell, N.M., and Steven Lechner and JaimieN. Cavanaugh of Mountain States Legal Foundationrepresent the plaintiffs. Eric D. Jantz of New MexicoEnvironmental Law Center in Santa Fe, N.M., Tho-mas Linzey of Community Environmental Legal inMercersburg, Pa., and Daniel E. Brannen Jr. of Bran-nen Law in Santa Fe represent the defendants. �

Gas Pipeline Operator SeeksDeclaratory Judgment, RemovalOf Bull From EasementCOVINGTON, Ky. — Columbia Gas Transmissionfiled a declaratory judgment complaint and motion fora temporary restraining order April 14 in the U.S. Dis-trict Court for the Eastern District of Kentucky againsta Foster, Ky., property owner who refuses to restrain anaggressive bull and dogs on his property to allow entryto a natural gas pipeline right of way (Columbia GasTransmission v. Gary Galloway, No. 14-77, E.D. Ky.).

(Complaint available. Document #15-140506-011C.Motion for temporary restraining order available.Document #15-140506-012M.)

‘‘This case arises from Defendant Gary Galloway’sunreasonable interference with Columbia’s rightsunder an easement, namely to access and maintain apipeline on Mr. Galloway’s property,’’ according toColumbia Gas Transmission.

Aggressive AnimalsGalloway refuses to temporarily pen his bull and cows,which he advises are aggressive, and dogs on the prop-erty, according to Columbia Gas Transmission.

Columbia Gas Transmission avers that it has an ease-ment through Galloway’s property based on a June 6,1946, agreement executed by Galloway’s predecessorsin interest, Albert and Louise Galloway, and CincinnatiGas Transmission Co., the predecessor to ColumbiaGas Transmission.

The subject pipeline is the primary feed to Cincinnatiand a part of the pipelines that provide service to theeastern seaboard of the United States, according toColumbia Gas Transmission. The pipeline is undergoing

maintenance in accordance with a Federal Energy Regu-latory Commission 7(c) certificate in conjunction withKO Transmission, a subsidiary of Duke Energy, accord-ing to Columbia Gas Transmission.

In the course of completing a survey of the easementApril 2, 2014, on Galloway’s property, Columbia GasTransmission representatives asked Galloway to pen theaggressive animals. In response to repeated requestssince, Galloway avers that damages would be dueunder the easement agreement if he were required topen the bull, according to Columbia Gas Transmission.

‘‘Mr. Galloway has consistently refused to pen, or other-wise remove from the easement area, the bull or otheraggressive animals,’’ according to Columbia GasTransmission.

Declaratory JudgmentColumbia Gas Transmission seeks declaratory judg-ment that the right of way agreement expressly grantsit the right to lay, maintain and remove the natural gaspipeline and to enter to the right of way. In addition,Columbia Gas Transmission seeks a declaration thatGalloway’s refusal to pen the aggressive animals is anunreasonable burden and interference with its rightsunder the agreement and that Galloway is required toprovide reasonable access by removing from the ease-ment any aggressive animals.

Columbia Gas Transmission seeks a temporary restrain-ing order requiring Galloway to remove the aggressiveanimals from the easement, temporary injunction grant-ing relief pending final judgment and entry of a perma-nent injunction.

J. Brian Jackson of McGuireWoods in Charlottesville,Va., represents Columbia Gas. �

Pennsylvania Plaintiffs SueWell, Pipeline OperatorsFor Loss Of Property ValueSCRANTON, Pa. — A natural gas extraction companyand a natural gas pipeline company were sued April 9in the U.S. District Court for the Middle District ofPennsylvania for loss of use by property owners; thedefendants have yet to file an appearance in the lawsuit

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assigned April 11 to Judge Malachy E. Mannion (Tho-mas Chaffee, et al. v. Talisman Energy USA Inc, et al.,No. 14-690, M.D. Pa.).

(Complaint available. Document #94-140513-008C.)

Thomas and Carol Chaffee, Bill and Alicia Ferullo andLois Klotz are residents or owners of real property inBradford County, Pa. They sued Talisman Energy USAInc. and Central New York Oil and Gas Co. Inc. onApril 9 for damages under theories of private, continu-ing and abatable nuisance and negligence/recklessnessfor natural gas extraction and pipeline activities thathave allegedly damaged the real properties and reducedthe plaintiffs’ enjoyment of the real properties.

Drilling ActivitiesBeginning in late 2010, Talisman Energy began or hadothers begin drilling activities in close proximity to theirresidences and real properties, according to the plain-tiffs. The plaintiffs identify seven natural gas wells outof some 41 natural gas wells near their propertiesspudded and finished by hydraulic fracturing.

The drilling and hydraulic fracturing caused ‘‘very loud,intermittent, and unpleasant noise’’ that could be heardfrom hundreds of feet away ‘‘and disturbed Plaintiffs’daily activities,’’ according to the plaintiffs.

In addition, flaring at the well pads ‘‘released toxic andhazardous smoke into the air and ground of the sur-rounding area,’’ according to the plaintiffs.

‘‘Defendant Talisman’s natural gas activities also inter-mittently create a strong and unpleasant chemical odorwhich can often be smelled, and even tasted, from Plain-tiffs’ properties.

‘‘The increased traffic caused by Defendant Talismancaused and continues to cause substantial intermittentdust and diesel fumes to enter Plaintiffs’ properties,’’according to the plaintiffs.

After the completion of the so-called Young 1 well,Klotz and the Chaffees noticed a ‘‘dramatic change inthe quality of their water supplies,’’ according to theplaintiffs. ‘‘The water coming from the water welllocated on the Chaffees’ property thereafter frequentlyturned milky white in color with an oily sheen thatwould eventually settle into small clumps in the

water. Additionally, Plaintiff Klotz subsequently hadthe water coming from the water well located on herproperty tested and discovered the presence of methane.’’

Water Well Vent

Talisman installed a vent on the Chaffees’ water wellin February 2013 to vent methane and provided a waterbuffalo to supply them potable water, according to theplaintiffs.

Activities at the Young well pad cause the release ofhazardous materials including silica, benzene, ethylben-zene, trimethylbenzene, toluene and xylene, accordingto the plaintiffs. Klotz and the Chaffees experienceburning eyes, throat and lungs; headaches, dizzinessand nausea; irritated skin; and a persistent metallictaste in the mouth, according to the plaintiffs.

The Chaffees moved out of their home on March 13,2013, in fear for their lives, and return only to performmaintenance tasks, according to the plaintiffs.

Central New York Oil constructed the so-called Stage-coach Pipeline, a 30-inch natural gas transmission line,in 2001. The pipeline is within 1,200 feet of the Fer-ullos’ property, according to the plaintiffs.

Central New York vented natural gas and other hazar-dous or radioactive chemicals from the pipeline Sept. 7,2011, for 10 hours, according to the plaintiffs. In addi-tion to releasing the hazardous materials and natural gas,the venting created a sound like a jet engine. ‘‘The Fer-ullos have no way of knowing if or when DefendantCentral New York might vent the Stagecoach Pipelinein the future.’’

Operation and maintenance of the pipeline causes‘‘intermittent, extremely disruptive, and extremely dan-gerous’’ large truck and heavy machinery traffic on therural roads around their properties, according to theplaintiffs.

Gathering Pipelines

Talisman Energy owns or operates at least four gather-ing pipelines within 1,800 feet of the Ferullos’ property,according to the plaintiffs. The gathering pipelinescause additional dangerous traffic and generate dustand diesel fumes, according to the plaintiffs.

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Tallisman also operates impoundments within fourmiles of their properties, according to the plaintiffs.Tallisman stores produced water from natural gaswells and fresh water in the impoundments, accordingto the plaintiffs. The produced water contains signifi-cant amounts of toxic, radioactive or otherwise hazar-dous substances, according to the plaintiffs.

Edward J. Ciarimboli of Fellerman & Ciarimboli inKingston, Pa., represents the plaintiffs. �

Natural Gas Pipeline OperatorAppeals $78,000 AwardIn Pennsylvania Easement SuitPHILADELPHIA — A natural gas pipeline companyordered to pay a Pike County, Pa., property owner$78,545 in compensation Feb. 24 in the U.S. DistrictCourt for the Middle District of Pennsylvania in aneminent domain condemnation action to allow con-struction of a second pipeline in an existing right-of-way filed notice of appeal April 7 in the Third CircuitU.S. Court of Appeals (Tennessee Gas Pipeline Co. v.Permanent Easements, et al., No. 14-1821, 3rd Cir.).

(Summary of case available. Document #94-140513-022B.)

Tennessee Gas Pipeline Co. filed a condemnationaction against Fox Hollow Estates under the NaturalGas Act (15 U.S. Code Section 717) in January 2011 toacquire permanent and temporary easements (Tennes-see Gas Pipeline Co. v. Permanent Easements, et al.,No. 11-28, M.D. Pa.; 2014 U.S. Dist. LEXIS 23895).Judge A. Richard Caputo conducted a bench trial inNovember 2013 and issued these findings of fact andlaw on Feb. 24.

Pike County

Fox Hollow Estates owns 298.97 acres in ShoholaTownship, Pike County, Pa. Fox Hollow Estatesacquired the property in May 2005 for $1,875,000with the intention to subdivide and sell single-familyresidences. Fox Hollow Estates has not developed thetract or received subdivision or development approvalfrom Shohola Township officials.

Tennessee Gas Pipeline’s predecessor, Tennessee GasTransmission Co., was granted an easement and right-of-way in 1955 to operate and maintain a pipeline onthe subject property. Tennessee Gas Pipeline received acertificate of public convenience and necessity on May14, 2010, from the Federal Energy Regulatory Com-mission to construct a new pipeline and compressorsand to modify existing facilities on its so-called 300Line, which includes the pipeline in the right-of-wayon the Fox Hollow Estates tract.

Tennessee Gas Pipeline filed a complaint in condemna-tion on Jan. 5, 2011, to condemn permanent rights-of-way and easements of 25 feet in width and comprising1.732 acres of the Fox Hollow Estates tract. TennesseeGas Pipeline sought to widen the right-of-way from 50feet to 75 feet. Tennessee Gas Pipeline also soughttemporary easements of 5.413 acres on the Fox HollowEstates tract to create workspace it required to constructthe second pipeline on the right-of-way. Tennessee GasPipeline avers that the temporary and permanent ease-ments are necessary to construct, operate and maintainthe pipeline approved in the May 14, 2010, certificate.

Tennessee Gas Pipeline and Fox Hollow Estatesentered into a stipulation on Feb. 18, 2011, agreeingto the entry of an order granting Tennessee Gas Pipe-line immediate possession of the rights-of-way uponposting of a bond to secure just compensation. FoxHollow Estates reserved the right to challenge theamount of compensation offered by Tennessee GasPipeline.

Construction CompleteTennessee Gas Pipeline completed construction of thesecond pipeline and restored the temporary right-of-way.

The fair market value of the Fox Hollow Estates tractdecreased by $20,000 as a result of the taking of thepermanent easement.

Before the taking, the temporary easement was coveredwith trees. The restored temporary easement has beengraded, mulched and seeded. To replace the treesremoved from the temporary easement, 155 trees areneeded. The cost of 155 trees is $6,885 plus $290 pertree for replanting for a total cost of $44,950 to restorethe temporary easement.

In the summary of the case filed April 16 by TennesseeGas Pipeline, three issues are identified for appeal.

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The company avers admission of testimony by StephenSameroff, a Fox Hollow representative, and its experts,Michael Weeks and James Leary, to determine thatcompensation for the alleged taking was in error. Thecompany also avers that the court erred by awardingcompensation for the cost of replanting trees and restor-ing the temporary easement to pre-taking condition.

Finally, Tennessee Gas Pipeline avers that it was in errorto award $51,835 for replanting and restoring the tem-porary easement because the amount exceeds the mar-ket value of the temporary easement.

Elizabeth U. Witmer, James G. Rosenberg and Sean T.O’Neill of Saul Ewing in Wayne, Pa., and Matthew M.Haar and Patrick F. Nugent of Saul Ewing in Harris-burg represent Tennessee Gas Pipeline. John T. Stiehof Levy, Stieh & Gaughan in Milford, Pa., representsFox Hollow Estates. �

Pennsylvania Physician Argues1st Amendment StandingTo Challenge Trade Secrets ActSCRANTON, Pa. — The Pennsylvania physiciansuing the state attorney general and secretary of theDepartment of Environmental Protection in the U.S.District Court for the Middle District of Pennsylvaniafor relief from statutory restrictions on his ability todiscover the chemicals in proprietary hydraulic fractur-ing fluids used in natural gas extraction he alleges violatehis civil rights under the First and 14th amendments tothe U.S. Constitution and expose him to professionaldisciplinary action by the American Medical Associa-tion filed a brief April 30 opposing motions to dismisson the grounds he lacks standing (Dr. Alfonso Rodri-guez, M.D., v. Michael L. Krancer, et al., No. 12-1458,M.D. Pa.).

(Response to motion to dismiss available. Document#94-140513-020B. Amicus curiae brief in support ofmotion to dismiss available. Document #94-140513-021M.)

Alfonso Rodriguez, M.D., is a nephrologist and physi-cian specializing in the treatment of renal diseases,

hypertension and advanced diabetes, according to therecord. Rodriguez directs several hemodialysis unitsfrom his medical practice in Dallas, Pa.

Declaratory Judgment

Rodriguez filed a declaratory judgment action in July2012 against Michael L. Krancer, the secretary of thePennsylvania Department of Environmental Protec-tion (DEP), Robert F. Powelson, chairman of thePennsylvania Public Utility Commission, and theattorney general of Pennsylvania in their officialcapacities. When the suit was filed in July 2012,Linda L. Kelly was the attorney general. Kathleen G.Kane was sworn is a Pennsylvania attorney generalin January 2013 and automatically substituted forKelly in the action, according to the record. Krancerhas resigned and been replaced by E. ChristopherAbruzzo as DEP secretary.

Rodriguez avers that it is common knowledge in thenatural gas industry fracking fluids contain a mixture ofchemicals including benzene, toluene, ethylbenzene,xylene, microbiocides, gylcols, glycol ethers and petro-leum products.

Rodriguez alleged two counts against the defendantswith respect to the adoption in February 2012 bythe Pennsylvania General Assembly of Act 13. By adop-tion of Act 13, the General Assembly amended theOil and Gas Act (Pennsylvania Combined Statutes58:3222.1[b][11] 2012) to limit physicians treatingpatients exposed to fracking fluids from discoveringwhat chemicals are in the fluids designated as tradesecrets by a company, according to Rodriguez. Rodri-guez refers to Act 13 as the Medical Gag Act.

Physicians, Scientists & Engineers for Health Energyfiled a brief on Jan. 23, 2013, in support of Rodriguez.

Judge Richard A. Caputo concluded that Rodriguezlacks standing and granted defense motions to dismisson Oct. 23, 2013 (2013 U.S. Dist. LEXIS 152207). Inresponse to a motion to reconsider, Judge Caputogranted Rodriguez leave to file the amended complaintfiled Jan. 31, 2014.

Powelson, the chairman of the Pennsylvania PublicUtility Commission, was dismissed by stipulation onFeb. 7.

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Amended Complaint

The amended complaint does cure the deficiencies inthe pleadings because Rodriguez has not alleged aninjury, Rodriguez does not have standing to challengethe Act 13 provisions codified at Pennsylvania Conso-lidated Statutes 58:3222.1(b)(10) and (b)(11), accord-ing to Abruzzo.

Abruzzo’s argument is contrary to U.S. Supreme Courtprecedent, according to Rodriguez. ‘‘The SupremeCourt of the United States has established that standingto maintain a pre-enforcement anticipatory challenge tolaws restricting First Amendment speech need notimplicate criminal sanctions. The threat of criminal,civil and/or employment jeopardy provide a sufficientbasis for a plaintiff to establish standing to challenge alaw restricting First Amendment speech without theneed to the plaintiff to first subject himself to civil oremployment jeopardy.

‘‘Plaintiff can only gain access to the needed informa-tion under Act 13 by signing a broad and vaguelydefined confidentiality agreement that prohibits medi-cal communications required to be made by plaintiff byethical rules that govern plaintiff’s medical practice,’’according to Rodriguez.

‘‘Under these facts, every possible component necessaryto satisfy a pre-enforcement anticipatory First Amend-ment challenge to Act 13’s non-emergency medical gagrule is present to reject defendants’ motion to dismissfor lack of standing.’’

Halliburton Energy Services Inc. (HESI), which wasgranted leave April 3, 2014, to file an amicus curiaebrief in support of the defendants’ motions to dismiss,challenges Rodriguez’s claims on the merits rather thanthe affirmative defense of standing. HESI avers in thepetition for leave filed March 31 that it has investedmillions of dollars in the development of proprietaryhydraulic fracturing technology that is threatened byRodriguez’s challenge of Act 13.

‘‘The amended complaint of Dr. Alfonso Rodriguezrepresents a direct assault on the protection of intellec-tual property held by HESI and other similarly situatedentities,’’ according to HESI.

‘Overbroad View’‘‘Contrary to Plaintiff’s overbroad view of his FirstAmendment rights, where potential disclosure threa-tens to destroy the value of trade secrets, courts havefound that statutes, in particular the Uniform TradeSecrets Act (which has been adopted in Pennsylvania),that authorize enjoining speech that would dis-close trade secrets do not impermissibly infringe uponFirst Amendment rights. See DVD Copy Control Ass’n,Inc. v. Bunner, 31 Cal. 4th 864 (Cal. 2003) (prelimin-ary injunction issued pursuant to California tradesecret law did not violate First Amendment rights);see also Home Line Furniture, Inc. v. Bonner RetailMarketing, LLC, 630 F.Supp.2d 527 (E.D. Pa. 2009)(enjoining defendants from disclosing trade secretsunder the PUTSA [Pennsylvania Uniform TradeSecrets Act]). Because the Commonwealth can clearlyimpose directly upon Plaintiff, through the PUTSAand other vehicles, the same type of restrictions thatPlaintiff asserts are unconstitutional conditions, noneof the counts in the amended complaint states a validclaim.’’

The court may not as a matter of law grant the reliefRodriguez seeks, according to HESI. ‘‘Under Pennsyl-vania’s Statutory Construction Act, severability is notappropriate where the valid provisions of a statute ‘areso essentially and inseparably connected with, and sodepend upon, the void provision or application, thatit cannot be presumed the General Assembly wouldhave enacted the remaining provisions without thevoid one;’ or where the court finds that the remainingprovisions, standing alone, ‘are incomplete and incap-able of being executed in accordance with the legislativeintent.’ 1 Pa. C.S.A. [Consolidated Statutes Annotated]§ 1925.

‘‘Here, the Court may not rewrite Act 13 as Plaintiffseeks,’’ according to HESI. ‘‘Accordingly, the Courtshould dismiss Plaintiff’s claims to the extent he seeksthe disclosure of trade secrets to health professionalswithout any corresponding requirement to maintainthe confidentiality of those trade secrets.’’

CounselMichael M. Melloy, Lynn R. Rauch and ToddD. Kantorcyk of Manko, Gold, Katcher & Fox inBala Cynwyd, Pa., and Steven Leifer and ThomasC. Jackson of Baker Botts in Washington, D.C., repre-sent HESI.

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Paul Anthony Rossi of Kennett Square, Pa., repre-sents Rodriguez. Joshua John Voss of Conrad O’Brienin Harrisburg and Mark E. Seiberling and MatthewH. Haverstick of Conrad O’Brien in Philadelphiarepresent Abruzzo. Kane, Howard G. Hopkirk and

Gregory R. Neuhauser of the Pennsylvania Officeof Attorney General represent Kane. Jordan B. Yeagerof Curtin & Heefner in Doylestown, Pa., repre-sents Physicians, Scientists & Engineers for HealthEnergy. �

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,000.0

0.

Th

e se

llers,

Pr

imea

ux

Prop

ertie

s, In

c.,

had

purc

hase

d th

e

encu

mbe

red

prop

erty

in

2003

fro

m A

aron

Lag

neau

x an

d Er

ic La

gnea

ux f

or

$105

,000.0

0. O

il an

d ga

s ope

ratio

ns o

n th

e pr

oper

ty a

llege

dly

date

back

to 1

972.

The

Lagn

eaux

acq

uisit

ion

was v

ia ge

nera

tiona

l inh

erita

nces

dati

ng b

ack

to 1

971,

and

it ap

pare

ntly

inclu

ded

the m

iner

als be

caus

e Lag

neau

x sp

ecifi

cally

res

BO

ON

Ev.

CO

NO

CO

PH

ILLIP

S

A-1

MEALEY’S Fracking Report Vol. 1, #1 May 2014

Page 42: Mealey's Fracking-Report-sample-issue-may-2014

2

2003

.

The

defen

dant

oil a

nd g

as op

erator

, Ene

rQue

st, h

ad p

urcha

sed th

e

wells

and o

perat

ing ri

ghts

from

Philli

ps P

etrole

um C

ompa

ny in

2000

. En

erQue

st

sold

all o

f its

opera

ting

rights

and

intere

st in

the p

ropert

y, alo

ng w

ith al

l of i

ts

restor

e, the

surfa

ce of

the p

ropert

y.

In M

ay o

f 201

0, the

Boo

nes,

assert

ing c

ontam

inatio

n an

d pro

perty

dama

ge, fi

led su

it aga

inst s

ix oil

and g

as op

erator

s, inc

luding

CON

OCOP

HILL

IPS

,

The B

oone

s asse

rted t

hat th

ey ha

d with

in the

last

year

found

aban

done

d deb

ris an

d

equip

ment

and

assert

ed a

failur

e to p

roperl

y clea

n and

resto

re the

prop

erty.

In a

first

amen

ded p

etitio

n in J

uly of

2012

, the B

oone

s ide

ntifie

d thre

e of f

ive w

ells o

n

the pr

opert

y t.

EnerQ

uest

filed

a m

otion

for s

umma

ry jud

gmen

t asse

rting

that

the

Boon

es we

re pre

clude

d by l

aw fr

om as

sertin

g a to

rt or

contr

act c

laim

for pr

opert

y

dama

ge th

at pre

-dated

their

200

5 ac

quisi

tion

of the

prop

erty

witho

ut a

spec

ific

assign

ment

of tha

t righ

t from

the f

ormer

owne

r. A

mong

its e

xhibi

ts, E

nerQ

uest

that E

nerQ

uest

did no

t con

duct

any o

perat

ions o

n the

prop

erty a

fter A

pril 3

0, 20

04,

,

also a

ttach

ed th

e act

of sal

e from

Prim

eaux

to th

e Boo

nes d

ated A

ugus

t 26,

2005

,

show

ing th

at no

assig

nmen

t of p

re-ac

quisi

tion d

amag

e righ

ts we

re co

nvey

ed to

the

Boon

es by

the p

reviou

s own

er, Pr

imea

ux.

3

includ

ed n

ewly-

obtai

ned

assign

ments

of

rights

from

the

prev

ious

owne

rs,

Prim

eaux

and

Lag

neau

x. E

nerQ

uest

assert

ed th

at the

assi

gnme

nts w

ere in

valid

and

that a

ny to

rt cla

ims t

hey

soug

ht to

trans

fer w

ere p

rescri

bed

since

Lag

neau

x

sold

the pr

opert

y in 2

003 a

nd Pr

imea

ux so

ld the

prop

erty i

n 200

5.

The

trial

court

allo

wed

the B

oone

s pe

rmiss

ion t

o fil

e a

secon

d

supp

lemen

tal an

d ame

nding

petiti

on as

sertin

g the

ir rig

ht as

assign

ees t

o the

righ

ts

of the

prev

ious o

wners

; clai

ms fo

r frau

d an

d co

nspir

acy,

as we

ll as

the so

lidary

summ

ary ju

dgme

nt an

d exc

eptio

n of p

rescri

ption

.

III

. ST

ANDA

RD O

F REV

IEW

The g

rant o

r den

ial of

a mo

tion f

or su

mmary

judg

ment

is rev

iewed

de

wheth

er su

mmary

judg

ment

is ap

propri

ate; i

.e. w

hethe

r the

re is

any g

enuin

e issu

e

of ma

terial

fact,

and

whe

ther t

he m

ovan

t is e

ntitle

d to

judgm

ent a

s a m

atter

of

Sama

ha v

. Rau

, 07-1

726,

pp. 3

-4 (L

a. 2/2

6/08),

977

So.2

d 88

0, 88

2-83

perem

ptory

exce

ption

, with

evid

ence

bein

g int

roduc

ed a

t the

hea

ring

on th

e

to the

man

ifest

error-

Spec

ialize

d Lo

an

Servi

cing

LLC

v. Ja

nuar

y, 12

-2668

, pp.

3-4 (L

a. 6/2

8/13),

119

So.3

d 58

2, 58

4

(citat

ions o

mitte

d).

4 IV

. LA

W A

ND D

ISCU

SSIO

N

granti

ng th

e moti

on fo

r sum

mary

judgm

ent a

nd th

e exc

eptio

n of p

rescri

ption

filed

that t

he B

oone

s (1)

have

no

valid

contr

act c

laims

again

st En

erQue

st be

caus

e the

subs

eque

nt pu

rchase

r doc

trine

inva

lidate

s the

ir cla

ims f

or pre

-acqu

isitio

n prop

erty

dama

ge; t

he p

lainti

ffs ar

e not

a part

y to

any

lease,

assig

nmen

t, or

other

contr

act

with

EnerQ

uest;

and t

he pl

aintif

fs did

not o

btain

an as

signm

ent o

f any

contr

actua

l

rights

from

the p

reviou

s own

ers.

EnerQ

uest

furthe

r asse

rts th

at the

Boo

nes (

2)

have

no cl

aims i

n tort

beca

use a

ny to

rt cla

ims a

cquir

ed fr

om th

e prev

ious o

wners

do n

ot rel

ate b

ack

to the

orig

inal p

etitio

n; an

d En

erQue

st is

not s

olida

rily

liable

with

Petro

E fo

r any

actio

nable

tort

claim

s.

The B

oone

s argu

e tha

t (1)

their

contr

act c

laims

are v

alid b

ecau

se the

subs

eque

nt pu

rchase

r doc

trine

doe

s not

apply

; the

relev

ant c

ontra

cts g

ive th

em a

right

of ac

tion t

o sue

for d

amag

es an

d rest

oratio

n of t

he pr

opert

y; an

d the

contr

act

claim

s hav

e not

prescr

ibed b

ecau

se En

erQue

st op

erated

unde

r mine

ral le

ases u

ntil

2004

, and

the s

urfac

e lea

se wa

s in

effec

t unti

l 201

2. A

s to

the to

rt cla

ims,

the

Boon

es arg

ue th

at (2)

they

time

ly ass

erted

tort

claim

s aga

inst s

olida

ry an

d/or j

oint

tortfe

asors;

they

obta

ined

valid

assig

nmen

ts of

the to

rt cla

ims a

t the

time

of t

he

dama

ge; a

nd th

eir se

cond

supp

lemen

tal pe

tition

relat

es ba

ck to

the f

iling

of the

ir

origin

al pe

tition

for d

amag

es.

We b

egin

with

a rev

iew of

the s

ubseq

uent

purch

aser r

ule or

doctr

ine.

A-2

MEALEY’S Fracking Report Vol. 1, #1 May 2014

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5

Subs

eque

nt Pu

rchas

er Do

ctrine

Th

e sub

seque

nt pu

rchase

r rule

is a

jurisp

ruden

tial

rule w

hich h

olds t

hat a

n own

er of

prope

rty ha

s no r

ight o

r ac

tual

intere

st in

recov

ering

from

a t

hird

party

for

dama

ge w

hich

was i

nflict

ed o

n the

prop

erty

befor

e his

pu

rchase

, in th

e abs

ence

of an

assig

nmen

t or s

ubrog

ation

of

the ri

ghts

belon

ging t

o the

owne

r of t

he pr

opert

y whe

n the

dama

ge w

as inf

licted

. Ea

gle P

ipe an

d Sup

ply, I

nc. v

. Ame

rada

Hess

Cor

p., 10

-2267

, p. 8

(La.

10/25

/11),

79 So

.3d 24

6, 25

6-57.

In art

iculat

ing th

e app

licati

on an

d sou

rce of

the s

ubseq

uent

purch

aser

doctr

ine, t

he L

ouisi

ana S

uprem

e Cou

rt in

Eagle

Pipe

and S

upply

, Inc

. prov

ided a

thorou

gh a

nalys

is of

the p

ertine

nt pri

ncipl

es of

Louis

iana

prope

rty l

aw a

nd

s in

the L

ouisi

ana

Civil

Cod

e. R

eleva

nt to

our

inquir

ies he

re, a

real r

ight i

s not

defin

ed by

the C

ivil C

ode b

ut ha

s lon

g bee

n held

of ma

n to t

hings

and m

ay, t

heref

ore, b

Eagle

Pipe

and S

upply

, Inc

., 79 S

o.3d a

t 259

(quo

ting H

arwo

od O

il &

Minin

g Co.,

240 L

a. at

652,

124 S

o.2d a

t 767

(195

8)).

A rea

l righ

t and

a rea

l obli

gatio

n both

attac

h to a

thing

. Id.

at 26

1; La

.Civ.

Code

art. 1

764,

Revis

ion C

omme

nts--1

984,

(b).1

The l

egal

right

that a

perso

n has

again

st an

other

perso

n to

dema

nd th

e pe

rform

ance

of

an o

bliga

tion

is ca

lled

a pe

rsona

l righ

t. D

istinc

t from

a rea

l righ

t, wh

ich ca

n be

ass

erted

aga

inst t

he w

orld,

a pe

rsona

l righ

t is e

ffecti

ve

only

betw

een t

he pa

rties.

La.

C.C.

art. 1

758.

This

court

relati

onsh

ip to

man

and

refers

mere

ly to

an o

bliga

tion

one o

wes t

o ano

ther w

hich m

ay be

decla

red on

ly ag

ainst

1 A rea

l obli

gatio

n is t

ransfe

rred t

o the

unive

rsal o

r part

icular

succ

essor

who a

cquir

es the

mo

vable

or im

mova

ble th

ing to

whic

h the

oblig

ation

is at

tache

d, wi

thout

a spe

cial p

rovisi

on to

tha

t effe

ct.

Bu

t a p

articu

lar s

ucce

ssor

is no

t pers

onall

y bo

und,

unles

s he

assu

mes

the p

erson

al ob

ligati

ons o

f his

trans

feror

with

respe

ct to

the th

ing, a

nd h

e may

libe

rate h

imsel

f of t

he re

al ob

ligati

on by

aban

donin

g the

thing

. La.C

iv.Co

de ar

t. 176

4.

6

Harw

ood

Oil &

Mini

ng C

o., 2

40 L

a. at

651,

124

So.2d

at 7

67 [c

iting

Reag

an [v

. Mur

phy,

235

La. [5

29], 5

41, 1

05 So

.2d [2

10], 2

14 [(

1958

))].

. .

. .

[a co

ntrac

t abo

ut pro

perty

] doe

s not

conv

ey an

y rea

l righ

t or

titlRi

char

d v.

Hall,

2003

-1488

, p. 1

7-18

(La.4

/23/04

), 87

4

Reag

an, [1

05 So

.2d at

] 214

.

. . . .

Re

al rig

hts,

and

real

oblig

ation

s pa

ss to

a su

bseq

uent

acqu

irer o

f the

thing

to w

hich

it is

attac

hed

witho

ut the

nee

d of

a sti

pulat

ion to

that

effec

t. L

a. C[

iv.Co

de] a

rt. 1

764,

Revis

ion C

omme

nts--1

984,

(c). A

pe

rsona

l righ

t, by c

ontra

st, ca

nnot

be as

serted

by an

other

in the

absen

ce of

an as

signm

ent o

r sub

rogati

on. L

a. C.

C.

art. 1

764,

Revis

ion C

omme

nts--1

984,

(d) an

d (f).

Ea

gle P

ipe an

d Sup

ply, In

c., 79

So.3d

at 26

1-62 (

footno

tes om

itted).

Based

upo

n the

foreg

oing,

real r

ights

and

oblig

ation

s atta

ch to

the

thing

, whil

e pers

onal

rights

and o

bliga

tions

attac

h to t

he pe

rson.

Furth

er, an

d more

spec

ifica

lly, t

he re

al rig

hts a

nd o

bliga

tions

of o

wners

hip a

ttach

to a

piec

e of

prope

rty w

hen i

t is s

old w

ithou

t the

need

of a

stipu

lation

, but

the pe

rsona

l righ

ts

and o

bliga

tions

arisi

ng fr

om a

lease

betw

een t

he fo

rmer

owne

r and

the l

essee

for

even

ts oc

curri

ng b

efore

the sa

le do

not

pass

to the

new

own

er un

less t

hey

are

spec

ifica

lly as

signe

d.

As il

lustra

ted by

Eag

le Pi

pe a

nd S

upply

, Inc

. thro

ugh

its an

alysis

of

Clar

k v.

J.L.

Warn

er Co

. et

al.,

6 La

.Ann

. 40

8 (18

51)

and

subs

eque

nt

jurisp

ruden

ce, th

e form

er ow

ner r

etains

the r

ight to

reco

ver t

he da

mage

s cau

sed by

aris

es be

caus

e his

real

rights

in th

e

7

owne

rship

of the

prop

erty h

ave b

een d

isturb

ed--h

is us

e, en

joyme

nt or

dispo

sal of

Eagle

Pipe

and

Sup

ply, I

nc.,

79 S

o.3d

at 26

4. T

he co

urt fu

rther

stated

:

Clar

k ex

plicit

ly sta

tes [t

hat]

the p

erson

al rig

ht of

the

prope

rty ow

ner t

o dem

and d

amag

es for

the i

njury

to the

pro

perty

mus

t be a

ssign

ed o

r sub

rogate

d if

the p

erson

al rig

ht is

to su

rvive

a ch

ange

of ow

nersh

ip in

the pr

opert

y:

plaint

iff i

s in

the u

sual

form

for t

he

conv

eyan

ce

of rea

l est

ate

and

its

appu

rtena

nces.

It do

es no

t tran

sfer h

er cla

im

for da

mage

s, ex

pressl

y, no

r is t

here

anyth

ing

in it

which

ind

icates

a

trans

fer

by

impli

catio

n. T

he ri

ghts

and

appu

rtena

nces

menti

oned

in th

e bil

l of s

ale h

ave

alway

s be

en c

onsid

ered

real

rights

. It

does

not

appe

ar, th

erefor

e, eit

her b

y law

or c

ontra

ct,

that t

he pl

aintif

f has

any c

laim

for da

mage

s pre

vious

to th

e 16th

of M

ay, 1

848,

when

he

purch

ased t

he pr

opert

y. Ea

gle P

ipe an

d Sup

ply, In

c., 79

So.3d

at 26

4-65 (

quoti

ng C

lark,

6 La.A

nn. a

t 409

).

He

re, th

e ac

t of s

ale fr

om P

rimea

ux to

the

Boon

es on

Aug

ust 2

6,

and d

elive

r[s] w

ith fu

ll gu

arante

e of t

itle an

d free

from

all e

ncum

branc

es an

d with

18.66

-acre

tract

of lan

d in t

he le

gal d

escrip

tion.

Like

wise,

the p

reviou

s act

of sal

e

from

Lagn

eaux

to P

rimea

ux in

2003

conta

ined a

lmos

t ide

ntica

l lan

guag

e. U

nder

Clar

k and

Eag

le Pi

pe, th

is lan

guag

e is g

enera

l lang

uage

and i

n the

usua

l form

for a

lessee

for d

amag

e alre

ady d

one t

o the

land

.

A-3

MEALEY’S Fracking Report Vol. 1, #1 May 2014

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8

Prim

eaux

is su

bject

to mi

neral

reser

vatio

ns an

d lea

ses. T

he 20

05 P

rimea

ux ac

t of

sale t

o the

Boo

nes r

eferen

ces t

he p

rior s

ale fr

om L

agne

aux

to Pr

imea

ux in

200

3

and

provid

es the

reco

rdatio

n inf

ormati

on.

Both

acts

of sal

e stat

e tha

t the

sale

is

cting

the p

ropert

y. T

hus,

both

docu

ments

indica

te tha

t mine

ral ri

ghts

and l

eases

have

been

reser

ved a

nd en

cumb

er the

land

,

for da

mage

s.

The s

ubseq

uent

purch

aser d

octri

ne is

not li

mited

to ap

paren

t dam

ages;

it ap

plies

to pro

hibit

suit

again

st the

lesse

e whe

ther t

he pr

e-acq

uisitio

n dam

age i

s

appa

rent o

r not.

Eag

le Pi

pe a

nd S

upply

, Inc

., 79

So.3

d 24

6. If

dam

age t

o the

prope

rty is

appa

rent, t

he pu

rchase

r is p

resum

ed to

know

its c

ondit

ion an

d to h

ave

nego

tiated

a sal

e pric

e tak

ing th

e defe

cts in

to co

nside

ration

. Id.

If t

he da

mage

is

not a

ppare

nt, th

e purc

haser

has a

caus

e of a

ction

in re

dhibi

tion a

gains

t the s

eller

for

rescis

sion o

f the

sale

or red

uctio

n of t

he sa

le pri

ce, b

ut he

does

not h

ave a

righ

t of

.

The

subs

eque

nt pu

rchase

r doc

trine

is n

ot lim

ited

to tor

t clai

ms, a

s

show

n in

Clar

k, 6

La.A

nn. 4

08, a

nd it

is n

ot lim

ited

to ca

ses in

volvi

ng ex

pired

leases

, as s

ugge

sted b

y the

Boo

nes.

In it

s com

prehe

nsive

analy

sis of

the d

octri

ne,

the c

ourt

in Ea

gle P

ipe a

nd S

upply

, Inc

., 79

So.3

d at

266

(emph

asis

adde

d)

(footn

ote o

mitte

d), d

iscus

sed f

urthe

r jur

isprud

ence

tha

t inc

luded

the

rele

vant

issue

s, as

follow

s:

In

Matth

ews v

. Alsw

orth,

45

La.A

nn. 4

65, 1

2 So

. 51

8 (18

93),

prope

rty w

as so

ld su

bject

to an

exis

ting

lease

. Th

e new

owne

r file

d suit

again

st the

lesse

e for

a

his o

bliga

tions

, for

comp

ensat

ion fo

r the

dim

inutio

n in

9

the v

alue o

f the

pro

prope

rty, a

nd fo

r the

rent

for th

e yea

r whic

h ac

crued

in

the ye

ar be

fore t

he sa

le. T

his co

urt fo

und t

he ne

w ow

ner

had n

o righ

t of a

ction

to su

e for

dama

ges f

rom th

e less

ee

for d

amag

e to

the p

ropert

y befo

re the

sale,

eithe

r und

er the

leas

e con

tract

or in

tort.

Ins

tead,

the ri

ght t

o sue

for

dama

ge to

the

prope

rty in

flicte

d be

fore

the sa

le wa

s a

perso

nal r

ight o

f the

form

er ow

ner/l

essor

which

aros

e

the l

ease

durin

g the

tim

e the

less

ee o

wed

those

oblig

ation

s to t

he fo

rmer

owne

r/less

or.

Th

e form

er ow

ner h

ad no

t assi

gned

or su

broga

ted

this p

erson

al rig

ht to

the n

ew o

wner

in the

act o

f sale

. Th

e dee

d con

taine

d the

follo

wing

lang

uage

:

Said

lease

and

all th

e rig

hts

in,

to,

or un

der

the

same

are

trans

ferred

he

reby,

and

simult

aneo

usly

herew

ith,

to the

con

veye

e he

rein.

This

co

nvey

ance

is m

ade w

ith co

mplet

e tran

sfer

and

subro

gatio

n of a

ll rig

hts an

d all

actio

ns

of wa

rranty

or o

therw

ise ag

ainst

all fo

rmer

claim

ants,

prop

rietor

s, ten

ants,

or w

arran

tors

of the

prop

erty h

erein

conv

eyed

.

By th

is lan

guag

e, the

cou

rt he

ld the

new

own

er/les

sor

was s

ubrog

ated t

o the

lease

prov

ision

s, bu

t only

from

the

date

of his

purch

ase o

f the p

rope

rty is

liable

on

the

co

vena

nts

of his

lea

se,

and

to the

se,

unqu

estion

ably,

plai

ntiff

[the

new

prope

rty o

wner]

is

subro

gated

from

the d

ate of

his p

urcha

se. B

y the

use o

f

did n

ot be

come

an as

signe

e of d

amag

es of

date

prior

to M

atthe

ws, 4

5 La.A

nn. a

t 469

, 12 S

o. at

519.

Th

e pers

onal

right

of the

owne

r to s

ue fo

r dam

ages

was

not

expli

citly

assign

ed i

n the

act

of sal

e, an

d ad

dition

ally

was

not a

n ac

cesso

ry rig

ht wh

ich p

assed

wi

th the

title

with

out d

escrip

tion o

f, or

refere

nce t

o, the

cla

im.

In the

act o

f sale

, the

prop

erty

was s

pecif

ically

de

scribe

d, an

d the

re wa

s no

men

tion

of a

claim

for

were

addit

ional

rights

in th

e natu

re of

dama

ges,

the de

ed

Matth

ews,

45 L

a.Ann

. at

469,

12 S

o. at

519.

Matt

hews

reinf

orces

the pr

opos

ition

that p

erson

al rig

hts of

the f

ormer

owne

r do n

ot pa

ss wi

th the

prop

erty i

n an a

ct of

sale u

nless

spec

ifica

lly as

signe

d or

subro

gated

to th

e new

owne

r.

10

Thus

, eve

n whe

n prop

erty i

s con

veye

d duri

ng th

e term

of a

lease,

the

purch

aser c

anno

t rec

over

from

the le

ssee f

or da

mage

s acc

ruing

prio

r to

the sa

le.

See

also

Prad

os v

. Sou

th Ce

ntral

Bell

Tel.

Co.,

329

So.2d

744

(La.1

975).

In

Matth

ews,

12 S

o. 51

8, be

caus

e the

dee

d of

sale a

lso co

nvey

ed th

e lea

se an

d the

again

st the

lesse

e, bu

t only

for d

amag

es ari

sing a

fter t

he da

te of

sale.

In the

prese

nt ca

se, th

e acts

of sa

le fai

l to tr

ansfe

r any

pre-a

cquis

ition

rights

to th

e new

owne

rs for

dama

ges c

aused

by th

e less

ee pr

ior to

the a

ct of

sale

and

spec

ifica

lly w

ithho

ld the

mine

rals

and

all l

eases

from

the

act

of sal

e.

Lagn

eaux

reser

ved

the ri

ghts

for h

imsel

f in

2003

, and

in 2

005

Prim

eaux

, who

neve

r obta

ined t

hem

from

Lagn

eaux

, refe

rence

d the

mine

ral an

d lea

se res

ervati

ons

in its

sale

to the

Boo

nes a

nd po

inted

the B

oone

s to t

he re

corde

d prio

r act

of sal

e

from

Lagn

eaux

. Ac

cordi

ngly,

the B

oone

s kne

w tha

t the

land

was

encu

mbere

d by

reserv

ed m

ineral

righ

ts an

d lea

ses. U

nder

the su

bseq

uent

purch

aser d

octri

ne, th

ey

do no

t hav

e a ri

ght o

f acti

on to

sue t

he le

ssee f

or da

mage

s occ

urring

prior

to th

eir

acqu

isitio

n of t

he pr

opert

y.

Th

e Assi

gnme

nts

In Se

ptemb

er of

2012

, the B

oone

s obta

ined a

ssign

ments

from

form

er

owne

rs, L

agne

aux a

nd P

rimea

ux, in

attem

pts to

obtai

n the

righ

t to s

ue E

nerQ

uest

for da

mage

s tha

t the a

ct of

sale d

id no

t con

vey.

We f

ind th

at the

assig

nmen

ts als

o

fail t

o pro

vide

the p

lainti

ffs w

ith a

righ

t of a

ction

for p

re-ac

quisi

tion

dama

ges

again

st En

erQue

st. T

he L

agne

aux a

ssign

ment

attem

pts to

assig

n all

perso

nal a

nd

tort c

auses

of ac

tion,

includ

ing in

herit

ed ri

ghts,

to th

e Boo

nes.

Like

the a

ct of

sale,

howe

ver,

the as

signm

ent s

pecif

ically

exclu

des m

ineral

and

contr

actua

l righ

ts an

d

A-4

MEALEY’S Fracking Report Vol. 1, #1 May 2014

Page 45: Mealey's Fracking-Report-sample-issue-may-2014

11

leases

. Th

e La

gnea

ux a

ssign

ment

states

in th

e fou

rteen

th pa

ragrap

h (em

phasi

s

adde

d):

Nothi

ng he

rein

shall

affec

t and

this

Agre

emen

t spe

cifica

lly ex

clude

s the

mine

ral r

ights

and/o

r con

tractu

al rig

hts, in

cludin

g, bu

t not

limite

d to,

leases

, of th

e

Parti

es

had t

aken

a low

er pri

ce fr

om P

rimea

ux be

caus

e of d

amag

e cau

sed to

the l

and b

y

EnerQ

uest,

Lag

neau

x wo

uld h

ave k

nown

this

at lea

st by

the t

ime o

f sale

. Th

us,

unde

r La

.Civ.

Code

art.

231

5, an

d un

der

La.C

iv.Co

de a

rt. 3

493

spec

ifica

lly

gove

rning

dama

ge to

immo

vable

prop

erty,

Lagn

eaux

had o

ne ye

ar, or

until

Marc

h

of 20

04 to

brin

g su

it ag

ainst

EnerQ

uest.

The

refore

, in

2012

, Lag

neau

x ha

d no

right

of ac

tion i

n tort

to as

prescr

ibed e

ight y

ears

earli

er.

With

rega

rd to

the as

signm

ent b

y Prim

eaux

, also

in S

eptem

ber 2

012,

Prim

eaux

could

not

assign

contr

actua

l righ

ts un

der t

he le

ases b

ecau

se Pr

imea

ux

did n

ot ac

quire

contr

actua

l righ

ts up

on it

s purc

hase

from

Lagn

eaux

in 2

003.

If

Prim

eaux

thou

ght i

t had

to ta

ke a

lower

sale p

rice f

rom B

oone

in A

ugus

t of 2

005

beca

use o

f dam

age b

y a le

ssee,

it wo

uld ha

ve ac

quire

d tha

t kno

wled

ge at

least

by

the ti

me of

sale

and w

ould

have

had a

year,

or un

til Au

gust

of 20

06, t

o brin

g its

tort s

uit.

Howe

ver,

Prim

eaux

did

not t

ake

a low

er pri

ce; s

ince

it pa

id on

ly

$105

,000.0

0 for

the pr

opert

y in 2

003 a

nd so

ld it

to the

Boo

nes f

or $1

20,00

0.00 i

n

2005

, the

re ha

d be

en n

o dim

inutio

n of

value

. In

any

even

t, wh

en P

rimea

ux

exec

uted t

he as

signm

ent in

2012

, it ha

d no r

ight o

f acti

on to

assig

n to t

he B

oone

s.

Acco

rding

ly, th

e Bo

ones

did n

ot ob

tain

any

tort o

r co

ntrac

t righ

ts fro

m the

previo

us ow

ners

via th

e assi

gnme

nts to

sue f

or da

mage

s cau

sed pr

ior to

the a

ct of

sale i

n 200

5.

12

The

Boon

es sig

ned

affida

vits

statin

g tha

t Lag

neau

x an

d Pr

imea

ux

inten

ded t

o assi

gn co

ntrac

tual r

ights

to the

Boo

nes i

n the

assig

nmen

ts wh

ere th

ey

refere

nced

all r

ights

and c

auses

of ac

tion.

Tha

t is no

t wha

t these

assig

nmen

ts, th

e

words

of a

contr

act a

re cle

ar an

d exp

licit

and l

ead t

o no a

bsurd

cons

eque

nces,

no

art. 2

046.

Whe

n Ene

rQue

st ass

erted

in it

s moti

on fo

r sum

mary

judgm

ent t

hat t

he

Boon

es wo

uld no

t be a

ble to

prev

ail on

its c

laims

for d

amag

es ag

ainst

EnerQ

uest,

the bu

rden s

hifted

to th

e Boo

nes t

o sho

w tha

t they

could

prev

ail at

trial

:

Th

e bu

rden

of pro

of rem

ains

with

the m

ovan

t. Ho

weve

r, if

the m

ovan

t will

not b

ear t

he bu

rden o

f proo

f at

trial

on th

e ma

tter

that i

s be

fore

the c

ourt

on th

e mo

tion

fs b

urden

on

the m

otion

doe

s not

requir

e him

to n

egate

all

essen

tial

eleme

nts of

the a

dvers

s clai

m, ac

tion,

or de

fense,

bu

t rath

er to

point

out to

the c

ourt

that th

ere is

an ab

sence

of

factua

l sup

port

for o

ne o

r more

elem

ents

essen

tial t

o

if the

adv

erse

party

fail

s to

produ

ce f

actua

l su

pport

su

fficie

nt to

estab

lish

that h

e will

be ab

le to

satisf

y his

ev

identi

ary b

urden

of p

roof a

t tria

l, the

re is

no g

enuin

e iss

ue of

mate

rial f

act.

La.C

ode C

iv.P.

art. 9

66(C

)(2).

The

only

evide

nce

addu

ced

by th

e Bo

ones

are th

e ele

venth

-hour

assign

ments

whic

h do n

ot co

nvey

any v

alid t

ort or

contr

act c

laims

to th

e Boo

nes.

Acco

rding

ly, w

e find

that

the as

signm

ents

do no

t prov

ide th

e Boo

nes w

ith a

right

of ac

tion i

n tort

or in

contr

act to

sue E

nerQ

uest

for da

mage

s to t

he pr

opert

y prio

r to

the B

oone

s acq

uisitio

n of t

he pr

opert

y.

13

Stipu

lation

Pou

r Autr

ui

The

Boon

es ass

ert th

at the

ir co

ntrac

t clai

ms a

re sti

ll va

lid b

ecau

se,

while

not a

ctual

parti

es, th

ey ar

e thir

d part

y ben

eficia

ries t

o the

surfa

ce le

ase th

at

Lagn

eaux

gran

ted to

Ene

rQue

st in

2002

, purs

uant

to La

.Civ.

Code

art. 1

978.2 T

hey

cite H

azelw

ood

Farm

, Inc

. v. L

iberty

Oil

& Ga

s Cor

p., 0

2-266

(La.A

pp. 3

Cir.

4/2/03

), 84

4 So

.2d 3

80, w

rits d

enied

, 03-1

585

and

03-16

24 (L

a. 10

/31/03

), 85

7

So.2d

476.

The

re, th

e orig

inal 1

926

lease

provid

ed (e

mpha

sis ad

ded):

shall

be re

spon

sible

for al

l dam

ages

caus

ed

found

to cr

eate

a stip

ulatio

n po

ur a

utrui

in fav

or of

the H

azelw

ood

corpo

ration

,

which

acq

uired

own

ership

in 1

991

(Haz

elwoo

d wa

s ow

ned

by th

e Ed

muns

ton

family

who

had o

wned

the p

ropert

y sinc

e 196

8). T

he co

urt in

Haz

elwoo

d Far

m,

Inc., 8

44 So

.2d 38

0, ex

plaine

d tha

t this

findin

g was

the la

w of

the ca

se ba

sed up

on

a prio

r app

eal, w

hich m

ore th

oroug

hly an

alyze

d the

issu

e.

More

spec

ifica

lly, i

n Ha

zelwo

od F

arm,

Inc.

v. Lib

erty

Oil &

Gas

Corp

., 01-3

45 (L

a.App

. 3 C

ir. 6/

20/01

), 79

0 So

.2d 93

, writ

denie

d, 01

-2115

(La.

7/26/0

1), 7

94 S

o.2d

834,

the p

lainti

ff wa

s fou

nd to

hav

e no

right

of ac

tion

as a

party

to, o

r as a

n assi

gnee

of, a

mine

ral le

ase be

caus

e, as

here,

the v

endo

r befo

re

ghts

to him

self.

The

court

did,

howe

ver,

find t

hat t

he la

ngua

ge of

the o

rigina

l lea

se, ob

ligati

ng th

e gran

tee/le

ssee

to pa

y for

all da

mage

s cau

sed by

its o

perat

ions,

confe

rred a

bene

fit on

the c

urren

t

owne

r, Haz

elwoo

d:

Our j

urisp

ruden

ce re

cogn

izes s

evera

l fac

tors w

hich m

ust

be co

nside

red in

deter

minin

g whe

ther a

contr

act p

rovide

s

2

A co

ntrac

ting

party

may

stip

ulate

a be

nefit

for a

third

pers

on c

alled

a th

ird p

arty

bene

ficiar

y. O

nce t

he th

ird pa

rty ha

s man

ifeste

d his

inten

tion t

o ava

il him

self o

f the

bene

fit, th

e pa

rties

may n

ot dis

solve

the c

ontra

ct by

mutu

al co

nsen

t with

out t

he b

enef

s agre

emen

t.La

.Civ.

Code

art. 1

978.

A-5

MEALEY’S Fracking Report Vol. 1, #1 May 2014

Page 46: Mealey's Fracking-Report-sample-issue-may-2014

14

for a

stip

ulatio

n po

ur a

utrui.

Th

ese f

actor

s are

en

umera

ted in

And

repon

t v. A

cadia

Dril

ling

Co.,

231

So.2d

347,

351,

255 L

a. 34

7 (19

69) a

s:

(1) T

he e

xisten

ce o

f a

legal

relati

onsh

ip be

twee

n the

prom

isee

and

the th

ird p

erson

inv

olving

an

ob

ligati

on

owed

by

the

pro

misee

to

the

bene

ficiar

y wh

ich

perfo

rman

ce o

f the

prom

ise w

ill dis

charg

e; (2)

the

exist

ence

of

a fac

tual r

elatio

nship

be

twee

n the

prom

isee a

nd th

e thir

d pe

rson,

where

(a)

there

is a

possi

bility

of

future

lia

bility

eithe

r pers

onal

or rea

l on t

he pa

rt of

the p

romise

e to

the b

enefi

ciary

again

st wh

ich p

erform

ance

of

the p

romise

e (si

c) wi

ll pro

tect

the f

ormer;

(b)

securi

ng a

n ad

vanta

ge

for

the

third

perso

n ma

y be

nefic

ially

affec

t the p

romise

e in a

mate

rial

way;

(c) th

ere a

re tie

s of k

inship

or o

ther

circu

mstan

ces

indica

ting

that a

ben

efit b

y wa

y of

gratui

ty wa

s inte

nded

. Se

e Sm

ith,

Third

Part

y Ben

eficia

ries i

n Lou

isian

a: T

he

Stipu

lation

Pou

r Autr

ui, 1

1 Tu

l.L.R

ev. 1

8, 58

(193

6).

Hazel

wood

Far

m, In

c., 79

0 So.2

d at 1

00.

The H

azelw

ood c

ourt

did no

t spe

cifica

lly ap

ply th

e ind

ividu

al fac

tors

abov

e, bu

t rath

er foc

used

upon

lang

uage

of th

e lea

se in

Andr

epon

t, and

the a

lmos

t

identi

cal l

angu

age i

n the

lease

in H

azelw

ood.

In A

ndrep

ont,

a sha

re cro

p ten

ant

and t

he la

ndow

ner e

ntered

into

a verb

al lea

se wh

erein

the la

ndow

ner a

llowe

d the

tenan

t to fa

rm so

ybea

ns on

the l

and i

n retu

rn for

twen

ty pe

rcent

of his

crop

. Late

r,

the ow

ner a

lso gr

anted

the o

il an

d gas

defen

dant

a lea

se; bu

t the

owne

r neg

otiate

d

broad

er lan

guag

e so

that

the fi

nal v

ersion

of t

he le

ase p

rotec

ted n

ot jus

t the

owne

r/less

or bu

t also

prote

cted t

he fa

rmer/

lessee

, Mr. A

ndrep

ont:

The p

rinted

form

use

d as

the o

il an

d ga

s lea

se ini

tially

timbe

r an

d gro

wing

crop

s of

the L

essor

caus

ed b

y Id

15

Id.

Upon

rev

iewing

this

lan

guag

e, the

Lou

isian

a Su

preme

Cou

rt fou

nd i

t to

create

a s

tipula

tion

pour

au

trui

seekin

g to e

nforce

a be

nefit

stipu

lated

in hi

s fav

or by

the

lando

wner

lesso

r as

a co

nditio

n of

a co

mmuta

tive

contr

act b

etwee

n the

land

owne

r less

or an

d the

oil a

nd ga

s les

see. D

efend

ants,

as as

signe

es of

the oi

l and

gas l

essee

, are

, the

refore

, pa

rties

to the

con

tract

in wh

ich t

he

Id. a

t 350

. Th

erefor

e, the

co

urt r

easo

ned

that

Andre

pont,

as

bene

ficiar

y of

the

stipu

lation

, had

a dir

ect r

ight o

f acti

on ag

ainst

the le

ssee

to rec

over

his da

mage

s. Ha

zelwo

od F

arm,

Inc.,

790 S

o.2d a

t 100

-01.

Beca

use

the la

ngua

ge in

the

lease

was s

trikin

gly si

milar

to th

at in

Andr

epon

t, the

Haz

elwoo

d co

urt in

terpre

ted th

e lea

se as

provid

ing a

stipu

lation

pour

autr

ui in

favor

of Ha

zelw

ood.

Like

wise,

in M

agno

lia C

oal T

ermina

l v.

Philli

ps O

il Com

pany

, 576

So.2d

475,

477 (

La. 1

991)

(emph

asis a

dded

), als

o cite

d

for a

ll da

mage

s ca

used

by

Magn

olia C

oal, 5

76 S

o.2d 4

75, a

high

ly dis

tingu

ishab

le ca

se, di

d not

discu

ss sti

pulat

ion p

our a

utrui

but d

id all

ow th

e ne

w lan

down

er, M

agno

lia, t

o

recov

er ag

ainst

the cu

rrent

lessee

, Phil

lips O

il, qu

oting

the a

bove

lang

uage

from

the m

ineral

lease

retai

ned

by th

e ori

ginal

owne

rs. T

he su

it wa

s for

conti

nuing

dama

ge ca

used

by th

e imp

roper

plugg

ing of

a we

ll tha

t was

leakin

g a ga

llon o

f oil

Amino

il, wh

ich la

ter m

erged

with

Phil

lips,

took

respo

nsibi

lity fo

r plug

ging

the

well a

nd cl

eanin

g the

prop

erty;

and i

t agre

ed in

writ

ing to

take

care

of the

prob

lem.

Two

years

afte

r M

agno

lia s

pent

almos

t $1

2 mi

llion

to pu

rchase

and

beg

in

deve

loping

the

2,200

-acre

tract,

Ami

noil

aban

done

d its

effo

rts, b

ut oil

poc

kets

16

reapp

eared

two m

onths

later

. Mag

nolia

lost

its fi

nanc

ial su

pport

on an

$86 m

illion

termi

nal a

nd st

oppe

d con

struc

tion d

ue to

contr

act f

ailure

s. T

he L

ouisi

ana S

uprem

e

Court

award

ed M

agno

lia $2

.1 mi

llion f

or su

rface

dama

ges.

In dis

cussi

ng j

urisd

iction

al co

nflict

s, wh

ere t

he c

ommi

ssion

er of

cons

ervati

on ha

d wron

gly fo

und t

he w

ell to

have

been

prop

erly p

lugge

d, the

court

caus

e of

actio

n no

t in

the p

urview

of t

he m

ineral

cod

e. T

he c

ourt

then

stated

:

erty r

ight a

rising

out o

f the

origi

nal

Id. a

t 483

. Th

e cou

rt cit

ed A

ndrep

ont,

231

So.2d

347,

for th

is pro

posit

ion.

Since

And

repon

t doe

s not

conta

in thi

s lan

guag

e,

right

to rec

eive i

ts pa

rt of

the

dama

ges

befor

e or

separa

tely

from

the d

amag

es pa

id to

the s

hare

cropp

er,

Andre

pont,

by th

e oil

and g

as les

see, p

ursua

nt to

La.R

.S. 9:

3204

. In

spite

of th

e

conte

xtual

dissim

ilarit

ies, i

t is t

his q

uote

from

Magn

olia

Coal

that t

he p

lainti

ffs

have

cryp

ticall

y an

d im

provid

ently

pull

ed fr

om th

e case

with

out f

urthe

r ana

lysis

and w

ithou

t rec

oncil

ing it

with

Eagle

Pipe

twen

ty ye

ars la

ter.

Here,

the

defen

dant

EnerQ

uest,

pred

ecess

or of

the d

efend

ant P

etro

ything

on th

e prop

erty,

but r

ather,

comp

letely

vaca

ted

the p

ropert

y an

d so

ld all

of i

ts ass

ets a

nd o

bliga

tions

a ye

ar be

fore t

he B

oone

s

purch

ased

the p

ropert

y, as

discu

ssed

fully

below

. M

oreov

er, th

e Boo

nes d

id no

t

introd

uce t

he m

ineral

lease

for a

comp

ariso

n of t

he la

ngua

ge. A

nd he

re, th

ere w

as

no c

ontin

uing

dama

ge b

y En

erQue

st, a

s a c

ontin

uing

tort i

s one

in w

hich

the

Eagle

Pipe

, 79 S

o.3d a

t 279

. We f

ind no

supp

ort fo

r th

Magn

olia C

oal c

ase.

A-6

MEALEY’S Fracking Report Vol. 1, #1 May 2014

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17

The o

nly le

ase in

the r

ecord

betw

een a

form

er ow

ner a

nd E

nerQ

uest,

is the

200

2 su

rface

lease

gran

ted b

y La

gnea

ux b

efore

its sa

le of

the p

ropert

y to

Prim

eaux

in 20

03.

The s

urfac

e lea

se tha

t Lag

neau

x gran

ted to

Ene

rQue

st did

not

conta

in lan

guag

e sim

ilar t

o the

abov

e lan

guag

e or a

ddres

s dam

ages

in an

y man

ner.

It all

owed

Ene

rQue

st to

use t

he su

rface

of th

e lan

d for

cons

tructi

ng an

d acc

essing

its fa

cilitie

s and

oblig

ated E

nerQ

uest

to rem

ove i

ts fix

tures

and r

estore

the l

and a

s

nearl

y as

practi

cable

to it

s orig

inal c

ondit

ion w

ithin

six m

onths

afte

r the

lease

expir

ed.

It ac

know

ledge

d the

rece

ipt of

adeq

uate

and s

uffici

ent c

onsid

eratio

n for

this

acce

ss, p

resum

ably

the l

ease

paym

ents

and

any

other

incom

e fro

m the

mine

rals b

y whic

h Lag

neau

x wou

ld pro

fit w

hen E

nerQ

uest

broug

ht the

prod

uct to

the s

urfac

e. I

t ex

tende

d the

prov

ision

s of

the l

ease

to the

heir

s, de

visee

s,

exec

utors,

admi

nistra

tors,

repres

entat

ives,

succ

essors

, and

assig

ns of

the l

essor

and

the le

ssee.

How

ever,

the p

rovisi

ons i

t exte

nded

did n

ot inc

lude m

oney

dama

ges o

r

prope

rty da

mage

s.

Nor c

ould

the pa

rties

have

inten

ded i

n 200

2 for

a ben

efit to

inure

to a

future

purch

aser w

ho ow

ned n

o mine

ral ri

ghts

and w

ho st

ood t

o gain

nothi

ng by

an

of co

nside

ration

rec

eived

in s

uch

scena

rio.

More

over,

und

er the

And

repon

t

factor

s, the

re wa

s no

lega

l or f

actua

l rela

tions

hip b

etwee

n En

erQue

st an

d the

Boon

es. M

r. Boo

ne ad

mitte

d in h

is de

posit

ion th

at he

had n

ever

met L

agne

aux.

The

inten

tion

of the

part

ies a

nd th

e lan

guag

e reg

arding

dam

ages

is

param

ount

in the

juris

prude

nce

on s

tipula

tions

pou

r au

trui.

In

Brou

ssard

v.

North

cott

Explo

ratio

n Co

., Inc

., 48

1 So

.2d 1

25, 1

27 (L

a.198

6), th

e Lo

uisian

a

Supre

me C

ourt

found

no

stipu

lation

pou

r au

trui i

n fav

or of

the p

lainti

ff ev

en

thoug

h an a

ttemp

t to m

odify

the l

angu

age,

simila

r to

Andr

epon

t, wa

s mad

e. T

he

18

court

reite

rated

that

a stip

ulatio

n pou

r autr

ui ex

ists w

hen s

ome a

dvan

tage t

o a th

ird

perso

n is c

reated

as a

cond

ition o

r con

sidera

tion o

f a co

mmuta

tive c

ontra

ct:

In ord

er to

deter

mine

if a

stipu

lation

exist

s, we

mus

t look

to

the in

tentio

n of t

he pa

rties

at the

time t

he m

ineral

lease

wa

s ne

gotia

ted.

This

can

best

be

acco

mplis

hed

by

comp

aring

the

stan

dard

dama

ge c

lause

found

in

the

origin

al ve

rsion

of

the m

ineral

lease

to th

e mo

dified

ve

rsion

agree

d to b

y the

parti

es. T

he un

modif

ied ve

rsion

of

the D

amag

e Clau

se rea

d as f

ollow

s:

dama

ges

to tim

ber

and

growi

ng c

rops

of

In ne

gotia

ting

the m

ineral

lea

se the

part

ies

Howe

ver,

they

did n

ot mo

dify

the m

ineral

lea

se to

on, w

e can

easil

y dis

tingu

ish A

ndrep

ont v

. Aca

dia D

rillin

g Co

., 25

5 La

. 34

7, 23

1 So.2

d 347

(196

9), an

d Ha

rgro

der v

. Colu

mbia

Gulf T

rans

missi

on C

o., 29

0 So.2

d 874

(La.1

974).

Li

kewi

se, in

Lejeu

ne B

ros.,

Inc.

v. Go

odric

h Petr

oleum

Co.,

06-15

57,

p. 8 (

La. A

pp. 3

Cir.

11/28

/07), 9

81 So

.2d 23

, 29,

writ d

enied

, 08-2

98 (L

a. 4/4

/08),

978 S

o.2d 3

27, th

e cou

rt co

mpare

d the

lease

at is

sue t

o the

lease

in B

rous

sard

and

found

no st

ipulat

ion po

ur au

trui in

favo

r of t

he pl

aintif

fs:

As

in B

rous

sard

, the

dam

age

claus

e in

the B

aez

Lease

was

simila

rly m

odifi

ed.

The

origin

al da

mage

dama

ges t

o tim

ber a

nd g

rowing

crop

s of L

essor

caus

ed

the

all d

amag

es to

Lesso

r ca

Thus

, just

as in

Brou

ssard

, the d

amag

es pe

rmitte

d by t

he

Baez

Lea

se we

re lim

ited t

o the

dama

ges s

uffere

d by t

he

Lesso

r, M

r. Ba

ez.

The t

rial c

ourt

did no

t err

in fin

ding

LeJeu

ne B

rothe

rs wa

s not

a thir

d part

y ben

eficia

ry of

the

Baez

Lea

se.

19

In Wa

gone

r v. C

hevro

n USA

Inc.,

45,50

7 (La

.App

. 2 C

ir. 8/

18/10

) 55

So.3d

12,

writ

denie

d, 10

-2773

(La

. 3/2/

12),

83 S

o.3d

1032

, whic

h we

find

parti

cular

ly illu

strati

ve d

ue to

the

factua

l sim

ilarit

ies in

volvi

ng th

e sam

e leg

al

issue

s as t

hose

herei

n, the

seco

nd ci

rcuit

found

no st

ipulat

ion po

ur au

trui i

n fav

or

mine

ral le

ase w

ith a

form

er

owne

r. B

ased u

pon t

he su

bseq

uent

purch

aser d

octri

ne, f

inding

no co

nvey

ance

of

rights

in th

e acts

of sa

le, an

d find

ing no

lang

uage

confe

rring

third

party

righ

ts su

ch

as the

lang

uage

in M

agno

lia C

oal T

ermina

l, the

Wag

oner

court

foun

d tha

t the

plaint

iff ha

d no r

ight t

o sue

for p

re-ac

quisi

tion d

amag

es un

der t

he m

ineral

lease

s

obtai

ned b

y thre

e form

er oil

and g

as les

sees.

The

assig

nees/

lessee

s who

were

still ot

dismi

ssed i

n the

judg

ment

affirm

ed.

More

rec

ently

than

And

repon

t, the

Lou

isian

a Su

preme

Cou

rt ha

s

identi

fied t

hree c

riteri

a for

deter

minin

g whe

ther c

ontra

cting

parti

es ha

ve pr

ovide

d

a ben

efit f

or a t

hird p

arty:

1) the

stipu

lation

for a

third

party

is m

anife

stly c

lear;

2) the

re is

certa

inty

as to

the b

enefi

t prov

ided

the th

ird

party

; and

3) t

he b

enefi

t is n

ot a

mere

incide

nt of

the

contr

act b

etwee

n the

prom

isor a

nd th

e prom

isee.

. . .

The m

ost b

asic r

equir

emen

t of a

stipu

lation

pou

r au

trui i

s tha

t the

con

tract

manif

est a

clea

r inte

ntion

to

bene

fit th

e thir

d part

y; ab

sent s

uch a

clea

r man

ifesta

tion,

a pa

rty c

laimi

ng to

be

a thi

rd pa

rty b

enefi

ciary

cann

ot me

et his

burd

en o

f proo

f. A

stipu

lation

pou

r autr

ui is

neve

r pres

umed

. The

party

claim

ing th

e ben

efit b

ears

the

burde

n of p

roof.

Josep

h v. H

ospit

al Se

rvice

Dist

. No.

2 of P

arish

of St

. Mar

y, 05

-2364

, pp.

8-9 (L

a.

10/15

/06),

939

So.2d

120

6, 12

12 (

citati

ons

omitte

d) (fo

otnote

omi

tted);

La.C

iv.Co

de ar

t. 19

78; L

a.Civ.

Code

art.

1831

; see

also

Eag

le Pi

pe a

nd S

upply

,

A-7

MEALEY’S Fracking Report Vol. 1, #1 May 2014

Page 48: Mealey's Fracking-Report-sample-issue-may-2014

20

Inc., 7

9 So.3

d 246

. Fo

r the

reaso

ns sa

ted, w

e find

that

the pl

aintif

fs ha

ve no

t met

their

burde

n of p

roving

that

they a

re thi

rd pa

rty be

nefic

iaries

unde

r the

contr

acts

as

assert

ed.

Th

e 200

2 Sur

face L

ease

The B

oone

s argu

e tha

t the

2002

surfa

ce le

ase be

twee

n Lag

neau

x and

EnerQ

uest

had a

ten-y

ear t

erm; t

hat it

was

effec

tive u

ntil 2

012 w

hich i

nclud

ed th

e

owne

rship

of the

Boo

nes w

ho p

urcha

sed th

e prop

erty

in Au

gust,

200

5; an

d tha

t

there

was n

o evid

ence

that

it wa

s assi

gned

to an

other

opera

tor.

We d

isagre

e. A

s

previo

usly

discu

ssed,

Lagn

eaux

with

held

its le

ases a

nd co

ntrac

tual r

ights

from

the

assign

ment

to the

Boo

nes,

and

in an

y eve

nt the

surfa

ce le

ase d

id no

t prov

ide fo

r

dama

ges.

It on

ly pro

vided

for r

estora

tion w

hich w

as no

t due

until

six m

onths

after

the le

ase ex

pired

. Also

as di

scusse

d, the

Boo

nes w

ere no

t part

ies to

the l

ease,

and

the le

ase d

id no

t prov

ide a

stip

ulatio

n po

ur a

utrui

in fav

or of

the B

oone

s.

More

over,

the l

ease

had a

n effe

ctive

date

of Au

gust

1, 20

02, m

eanin

g tha

t it w

ould

have

expir

ed as

of A

ugus

t 1, 2

012,

and t

he B

oone

s did

not o

btain

the as

signm

ents

See L

ejeun

e Bro

s., In

c., 98

1 So.2

d at 2

8.

In ad

dition

to th

ere b

eing

no v

alid

assign

ment

from

Lagn

eaux

, the

record

is cl

ear t

hat E

nerQ

uest

cease

d its

opera

tions

on th

e prop

erty a

s of A

pril 3

0,

2004

, and

sold

all o

f its

phys

ical a

nd c

ontra

ctual

rights

, inc

luding

its l

eases

, to

. O

n Ap

sale

also

includ

ed a

ll pe

rsona

l pro

perty

, fix

tures,

fac

ilities

, tan

ks,

pump

s,

equip

ment,

mac

hinery

, well

s, we

llhea

ds, l

icens

es, p

ermits

, ease

ments

, righ

ts of

21

relati

ng to

the p

ropert

ies. T

his sa

le wa

s effe

ctive

on M

ay 1,

2004

.

Tem

phasi

s add

ed)

includ

ing w

ithou

t lim

itatio

n, all

righ

ts wi

th

respe

ct to

the us

e and

occu

patio

n of th

e sur

face o

f and

the s

ubsu

rface

depth

s und

er

g and

aban

don

all w

ells a

s req

uired

by

regula

tory

autho

rities

, to

level

all d

umps

, fill

in all

pits

,

remov

e all

debri

s, an

d othe

rwise

resto

re the

surfa

ce of

the l

and a

s req

uired

in th

e

mine

ral s

ervitu

de o

r lea

ses,

and

to co

mply

with

all a

pplic

able

orders

and

regula

tions

. Th

us, th

e surf

ace l

ease

rights

and o

bliga

tions

were

sold

and a

ssign

ed

,

prope

rty, p

hysic

al, c

ontra

ctual,

or o

therw

ise, a

fter A

pril 3

0, 20

04, o

ver a

yea

r

befor

e the

plain

tiffs

purch

ased t

he pr

opert

y on A

ugus

t 26,

2005

.

The B

oone

s argu

e tha

t Ene

rQue

st op

erated

on th

e prop

erty u

ntil 2

004,

and

that

a pe

rsona

l ac

tion

has

a lib

erativ

e pre

script

ion o

f ten

yea

rs un

der

legisl

ation

, a p

erson

al ac

tion

is s

La.C

iv.Co

de ar

t. 349

9. T

his ar

ticle

follow

s num

erous

othe

r arti

cles p

rovidi

ng fo

r

short

er, m

ore sp

ecifi

c pres

cripti

ve p

eriod

s, inc

luding

prev

iously

disc

ussed

artic

le

3492

whic

h go

verns

clai

ms f

or pro

perty

dam

age

and

provid

es a

one-y

ear

prescr

iptive

peri

od.

With

rega

rd to

a ten

-year

prescr

iptive

peri

od fo

r a p

erson

al

actio

n ari

sing

in co

ntrac

t, we

hav

e alre

ady

found

that

the B

oone

s hav

e fail

ed to

introd

uce

any

evide

nce

of a

contr

act b

y En

erQue

st tha

t gran

ts the

m a

right

of

actio

n ag

ainst

EnerQ

uest.

Acc

ording

ly, th

e Boo

nes h

ave n

ot pro

duce

d ev

idenc

e

that p

rovide

s the

m a r

ight o

f acti

on in

tort

or co

ntrac

t aga

inst E

nerQ

uest.

22

Relat

ion B

ack

In Se

ptemb

er 20

12, tw

o and

a ha

lf ye

ars af

ter fi

ling s

uit in

May

2010

,

the B

oone

s file

d a se

cond

supp

lemen

tal pe

tition

. Th

e peti

tion a

ttach

ed th

e new

ly

obtai

ned a

ssign

ments

, atte

mpted

to cr

eate

rights

in th

e Boo

nes a

s assi

gnee

s of t

he

forme

r own

ers, r

eitera

ted th

e earl

ier ca

uses

of ac

tion,

and a

dded

caus

es of

actio

n

for fr

aud,

cons

pirac

y, co

ncert

ed a

ction

, and

con

cealm

ent.

For

the fi

rst ti

me, i

t

alleg

ed a

caus

e of a

ction

unde

r the

Lou

isian

a Env

ironm

ental

Qua

lity A

ct, L

a.R.S.

30:22

71-22

81. T

he B

oone

s asse

rt tha

t the n

ew pe

tition

relat

ed ba

ck to

the o

rigina

l

petiti

on in

2010

. We m

ust d

isagre

e.

Even

if th

e Se

ptemb

er 20

12 a

ssign

ments

from

the

previo

us o

wners

had c

onfer

red va

lid an

d tim

ely ri

ghts,

the a

ssign

ments

aros

e two

and a

half

years

after

the or

igina

l peti

tion w

as fil

ed in

May

of 20

10.

As di

scusse

d, the

tort

rights

had p

rescri

bed b

efore

the or

igina

l peti

tion w

as fil

ed, a

nd th

e assi

gnme

nts di

d not

confe

r a ri

ght o

f acti

on in

con

tract.

Th

e rig

hts s

ough

t to

be b

estow

ed in

the

assign

ments

were

not e

xigibl

e at th

e tim

e of s

uit in

2010

. The

refore

, the c

laims

in

the ne

w pe

tition

were

supp

lemen

tal, n

ot am

endin

g, no

matt

er ho

w the

capti

on of

the pe

tition

read

s, an

d the

relat

ion ba

ck of

La.C

ode C

iv.P.

art. 1

153 a

pplie

s only

to

amen

ding p

etitio

ns.

Smith

v. C

utter

Biolo

gical,

99-20

68 (L

a.App

. 4 C

ir. 9/

6/00),

770 S

o.2d 3

92.3

-

Allen

v. S

tate,

Dept.

of P

ublic

Safe

ty &

Corre

ction

s, 12

-430,

p. 6 (

La.A

pp. 3

Cir.

11/7

/12),

107 S

o.3d 1

06, 1

10 (q

uotin

g

3 Un

der L

a.Cod

e Ci

v.P. a

rt. 1

151,

a pa

rty m

ay a

mend

its

petiti

on if

the

new

claim

s ac

crued

prior

to fi

ling t

he or

igina

l suit

; und

er Ar

ticle

1155

, a p

arty m

ay be

perm

itted t

o fil

e a

supp

lemen

tal p

etitio

n set

ting

forth

relate

d ite

ms o

f dam

age

or ca

uses

of ac

tion

that b

ecam

e ex

igible

after

the o

rigina

l peti

tion w

as fil

ed; b

ut the

relat

ion ba

ck of

Arti

cle 11

53 ap

plies

only

to the

amen

ded p

etitio

n. Se

e Cutt

er Bi

ologic

al, 77

0 So.2

d at 4

11-12

.

A-8

MEALEY’S Fracking Report Vol. 1, #1 May 2014

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23

Cutte

r Biol

ogica

l, 770

So.2d

at 41

3). N

or do

es an

origi

nal p

etitio

n file

d by a

party

witho

ut a r

ight o

f acti

on to

file

it. Se

e Nag

hi v.

Bren

er, 0

8-252

7 (La

. 6/26

/09),

17

So.3d

919.

In TC

C Co

ntrac

tors,

Inc. v

. Hos

pital

Servi

ce D

ist. N

o. 3 o

f Par

ish of

Lafou

rche,

10-68

5, p.

22-23

(La.A

pp. 1

Cir

12/8/

10),

52 So

.3d 11

03, 1

116-

17, th

e

first

circu

it fou

nd th

at cla

ims a

rising

via

an as

signm

ent d

id no

t bec

ome e

xigibl

e

prior

to the

date

of the

assig

nmen

t:

[O]ur

law,

as in

terpre

ted in

the j

urisp

ruden

ce, h

olds t

hat

in ord

er for

the d

octri

ne of

relat

ion ba

ck to

apply

and t

o cir

cumv

ent t

he e

ffect

of pre

script

ion, a

new

cau

se of

actio

n ass

erted

in a

n am

ende

d pe

tition

(1) m

ust h

ave

been

in e

xisten

ce a

t the

time

the

origin

al pe

tition

was

filed

; (2)

must

have

bee

n ve

sted

in the

plai

ntiffs

at th

at

or oc

curre

nce s

et for

th or

attem

pted t

o be s

et for

th in

the

See

La.

C.C.

P. art

. 115

3.

Be

caus

e a ci

vil ac

tion b

y defi

nition

can b

e brou

ght

only

by a

pers

on h

aving

a ri

ght o

f acti

on, i

t stan

ds to

rea

son t

hat a

n acti

on in

stitut

ed by

a pe

rson d

eterm

ined t

o

suffi

cient

to int

errup

t pres

cripti

on.

See

La. C

.C.P.

art.

68

1 and

La.

C.C.

art. 3

462.

. . . T

he re

lation

back

theo

ry em

bodie

d in L

a. C.

C.P.

art. 1

153 a

ssume

s tha

t the

re is

a leg

ally

viable

clai

m to

which

the

plead

ing c

an r

elate

back

. Na

ghi v

. Bren

er, 0

8-252

7, p.

10 (L

a. 6/2

6/09),

17

So.3d

919

, 925

. . .

. ch

aracte

r of t

he ri

ght to

so

can b

e give

n leg

al eff

ect o

nly fr

om th

e effe

ctive

date

of the

assi

gnme

nt, a

nd t

he a

ssign

ment

could

not

retroa

ctive

ly cu

re the

initia

l abs

ence

of a

righ

t of a

ction

by

the p

lainti

ffs.

24

Acco

rding

ly, th

e clai

ms

petiti

on do

not

relate

bac

k to t

he or

igina

l peti

tion.4 M

oreov

er, as

fully

discu

ssed

abov

e, the

assi

gnme

nts d

o no

t con

fer e

xistin

g rig

hts.

Addit

ionall

y, the

Boo

nes

have

not s

hown

that

they h

ad an

exigi

ble cl

aim un

der L

a.R.S.

30:22

76 at

the t

ime

of the

orig

inal p

etitio

n or

at the

time

the

LEQA

clai

m wa

s firs

t alle

ged

in the

secon

d su

pplem

ental

peti

tion.

Con

trary

to the

alle

gatio

ns in

the

petiti

ons,

Mr.

Boon

e test

ified

in h

is de

posit

ion o

n M

ay 8

, 201

3, tha

t he h

ad n

ot inc

urred

any

remed

iation

cos

ts as

requir

ed b

y La

.R.S.

30:2

276(G

)(3).

See

Mar

gone

, LLC

v.

Addis

on R

esour

ces,

Inc.,

04-70

(La.A

pp. 3

Cir.

12/1

5/04),

896

So.2

d 11

3, wr

it

denie

d, 05

-

assert

ions

in bri

ef, th

e ori

ginal

and

first

supp

lemen

tal p

etitio

ns d

o no

t asse

rt

solid

ary li

abilit

y, an

d the

add

itiona

l clai

ms a

nd c

auses

of a

ction

in th

e sec

ond

supp

lemen

tal pe

tition

do no

t rela

te ba

ck to

the o

rigina

l peti

tion.

V.

CONC

LUSI

ON

Ba

sed u

pon

the

granti

ng th

e moti

on fo

r sum

mary

judgm

ent a

nd ex

cepti

on of

presc

riptio

n in f

avor

of En

erQue

st Oi

l & G

as, L

LC.

Costs

of th

is ap

peal

are as

sessed

to th

e plai

ntiffs

,

Carlo

s and

Lori

Boo

ne.

AFFI

RMED

.

4

tion

of the

ir sta

tus c

hang

e as

one

of a

simple

cha

nge

in ca

pacit

y and

there

fore a

nalog

ous t

o Giro

ir v.

South

Louis

iana M

edica

l Cen

ter, D

iv. of

Hos

pitals

, 47

5 So.2

d 104

0 (La

.1985

), is

misp

laced

. Th

e wron

gful d

eath

claim

that

was a

llowe

d to

relate

ba

ck in

Giro

ir ha

d acc

rued p

rior t

o the

time o

f the

filin

g of t

he or

igina

l peti

tion.

A-9

MEALEY’S Fracking Report Vol. 1, #1 May 2014

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PA

RR

v.A

RU

BA

PE

TR

OLE

UM

PLT

FV

ER

DIC

T

B-1

MEALEY’S Fracking Report Vol. 1, #1 May 2014

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B-2

MEALEY’S Fracking Report Vol. 1, #1 May 2014

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B-3

MEALEY’S Fracking Report Vol. 1, #1 May 2014

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B-4

MEALEY’S Fracking Report Vol. 1, #1 May 2014

Page 54: Mealey's Fracking-Report-sample-issue-may-2014

IN TH

E UNI

TED S

TATE

S DIST

RICT C

OURT

FOR T

HE M

IDDL

E DIST

RICT O

F PEN

NSYL

VANI

A

THOM

AS A.

NEUH

ARD a

nd:

Case

No. 4:

11-cv-

01989

BARB

ARA S

. NEU

HARD

,: :

Plaint

iffs,

: :v.

:(Ju

dge Br

ann)

:RA

NGE R

ESOU

RCES

–:

APPA

LACH

IA, L

LC,

: :De

fendan

t.:

MEMO

RAND

UMAp

ril 30,

2014

This c

ase co

ncerns

a disp

ute ov

er an

oil an

d gas

lease

execut

ed by

the

Parties

. Thom

as A.

Neuha

rd and

Barba

ra S.

Neuha

rd (“P

laintiff

s” or

“the

Neuha

rds” o

r “Le

ssors”

) initia

ted th

e case

by fil

ing a C

ompla

int in

the C

ourt o

f

Comm

on Ple

as of

Lycom

ing Co

unty o

n Sept

ember

28, 20

11 (EC

F No. 1

, Ex. A

).

The N

euhard

s seek

a Decl

arator

y Judg

ment

clarify

ing th

at the

oil an

d gas

lease

(“Leas

e”) th

at they

enter

ed int

o with

the D

efenda

nt, Ra

nge Re

source

s–Appa

lachia

,

LLC (

“Defe

ndant”

or “R

ange”

or “L

essee”

) expi

red by

its ow

n term

s.1

On Oc

tober

28, 20

11, th

e Defe

ndant

remove

d this

case

to Fed

eral C

ourt

1 The D

efenda

nt wa

s Grea

t Lake

s Ener

gy Par

tners,

LLC a

t the ti

me th

e Part

ies ex

ecuted

the Le

ase. T

he De

fendan

t later

chang

ed its

name to

its cu

rrent

form:

Range

Resou

rces—

Appal

achia,

LLC.

1

Case

4:11

-cv-01

989-M

WB

Doc

umen

t 40

Filed

04/30

/14 P

age 1

of 37

based

on div

ersity

jurisd

iction,

pursu

ant to

28 U.

S.C. §

1332 a

nd 28

U.S.C.

§ 1441

(ECF N

o. 1).2 T

hen-Ch

ief Un

ited St

ates D

istrict

Court

Judge

Yvette

Kane

presid

ed ove

r the c

ase un

til it w

as rea

ssigne

d to U

nited

States

Distri

ct Cour

t Judge

Rober

t D. M

ariani

on No

vember

16, 20

11. T

he cas

e was

subseq

uently

reass

igned

to the

under

signed

on Ja

nuary

17, 20

13.

The D

efenda

nt file

d an A

nswer

with a

ffirma

tive d

efense

s, and

made

a

counte

rclaim

seeki

ng a d

eclara

tory j

udgme

nt tha

t the L

ease is

valid

(ECF

No. 7)

.

The P

laintiff

s filed

an an

swer

to the

count

erclaim

(ECF

No. 8)

. Disc

overy

was

then c

onduct

ed.

The c

ase is

presen

tly be

fore th

e Cour

t on t

he Par

ties’ c

ross m

otions

for

summa

ry jud

gment

(ECF

Nos. 2

2, 23, 2

4, 25,

26, 27

, 28, 29

, 30, 31

, 32, 33

, 34).

The C

ourt h

eld or

al argu

ment

on the

moti

ons on

Marc

h 26, 2

014. T

here a

re no

mater

ial fac

ts in d

ispute

, and t

he iss

ues be

fore th

e Cour

t invol

ve int

erpret

ation o

f

contra

ct prov

isions

as a m

atter o

f law.

The P

arties

have

fully

briefe

d the

issues

and

the ca

se is n

ow rip

e. Co

nseque

ntly, t

he cas

e is am

endabl

e to di

spositi

on in

its

curren

t post

ure.

As ela

borate

d belo

w, the

Neuha

rds’ M

otion

for Su

mmary

Judgm

ent sh

ould

2 The P

laintiff

s are

citizen

s of P

ennsyl

vania.

The D

efenda

nt is a

limited

liabil

itycom

pany o

rganiz

ed und

er the

laws o

f the s

tate of

Delaw

are.

2

Case

4:11

-cv-01

989-M

WB

Doc

umen

t 40

Filed

04/30

/14 P

age 2

of 37

be gra

nted.

Range

Resou

rce’s M

otion

for Su

mmary

Judgm

ent sh

ould b

e deni

ed.

I.BA

CKGR

OUND

On Ju

ne 21,

2006,

the P

arties

execu

ted an

Oil an

d Gas

Lease

. Pls.’

Statem

ent M

ateria

l Fact

s ¶ 1,

Dec. 1

4, 2012

, ECF

No. 23

[here

inafte

r “Pls

.’ SOF

”].

The L

ease p

rovide

d Rang

e the r

ights t

o proc

ure oi

l and g

as fro

m for

ty-sev

en (47

)

acres

owned

by th

e Neuh

ards s

ituate

in Le

wis To

wnshi

p, Lyco

ming

Count

y,

Pennsy

lvania

.3 Id. ¶

4. The

Lease

conta

ins a p

rimary

term

of fiv

e year

s calc

ulated

from

June 2

1, 2006

. Pls.’

Br. S

upp. M

ot. Su

mm. J.

Ex.1,

Dec. 1

4, 2012

, ECF

No.

26 [he

reinaf

ter Pl

s.’ Br.

Supp.

]. Un

less e

xtende

d by t

he com

mence

ment

of dri

lling

operat

ions o

r as o

therw

ise pr

ovided

, the L

ease w

ould e

xpire

by its

own t

erms o

n

June 2

1, 2011

.

On Ju

ne 13,

2011,

Range

execu

ted a D

esigna

tion o

f Unit

docum

ent fo

r the

“Null

Eugen

e A Un

it,” wh

ich it

filed w

ith th

e Lyco

ming

Count

y Reco

rder o

f

Deeds

on Ju

ne 15,

2011.

Def.

’s State

ment

Mater

ial Fac

ts ¶ 28

, Dec.

14, 20

12, EC

F

No. 27

[here

inafte

r “De

f.’s SO

F”]. T

he De

signat

ion of

Unit D

ocume

nt ind

icates

that “b

y virtu

e of th

e auth

ority

confer

red by

the te

rms o

f the le

ases”

it crea

tes a

3 At so

me po

int du

ring t

he per

iod be

tween

June 2

1, 2006

and J

une 21

, 2011,

the

Neuha

rds we

re div

orced.

In th

e prop

erty s

ettlem

ent ag

reeme

nt, Ba

rbara

Neuha

rd bec

ame th

esol

e own

er of

the su

rface

of the

47 ac

res, an

d Thom

as and

Barba

ra Ne

uhard

retain

ed, eq

ually,

their o

wners

hip in

terest

s in th

e subs

urface

rights

to th

e prop

erty;

these

rights

inclu

de the

oil an

dgas

conte

mplate

d in t

he Le

ase.

3

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NE

UH

AR

Dv.

RA

NG

ER

ES

OU

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395.06

38 acr

e prod

uction

unit c

ompri

sed of

nine

separa

tely ow

ned pa

rcels o

f land

that in

cludes

the N

euhard

s’ 47 a

cres.

Def.’s

Br. S

upp. M

ot. Su

mm. J.

, Ex. 2

(T),

Dec. 1

4, 2012

, ECF

No. 26

[here

inafte

r Def.

’s Br. S

upp.].

A non

-mate

rial fa

ct

remain

s disp

uted w

hether

Range

notifi

ed the

Neuha

rds of

the u

nit pl

an and

their

filing

the De

signat

ion of

Unit d

ocume

nt pri

or to

July 7

, 2011.

Range

did, h

oweve

r, acqu

ire a R

oad Ri

ght of

Way

Agree

ment

signed

by

Barba

ra Ne

uhard

on Jun

e 16, 2

011. D

ef.’s S

OF, ¶

30. T

he Ag

reeme

nt pro

vided

Range

the r

ight to

widen

and g

rade a

turn

on a lo

cal ro

ad to

make

it easi

er for

Range

’s truc

k traf

fic to

acces

s the s

urface

locat

ion fro

m wh

ich th

ey int

ended

to

drill t

he “1H

” gas

well o

n the

Null p

ropert

y. Ra

nge pa

id Ba

rbara

Neuha

rd $3,

000

as con

sidera

tion f

or thi

s Agre

ement

. Id. ¶

¶ 31, 4

1.

Range

engag

ed in

numero

us oth

er pre

parato

ry act

ivities

prior

to dr

illing

throug

hout th

e spri

ng of

2011.

Range

obtai

ned se

veral m

andato

ry per

mits f

rom

state a

nd loc

al regu

latory

agenci

es, in

cludin

g drill

ing, zo

ning, a

nd dev

elopm

ent

permi

ts. Id

. ¶¶ 11

, 13, 14

, 16–18

, 22, 24

. Rang

e cont

racted

with

an eng

ineeri

ng

firm to

desig

n a gr

ading

and er

osion

contro

l plan

for th

e well

pad sit

e, and

entere

d

into v

arious

agree

ments

with

other

landow

ners re

gardin

g its c

onstru

ction.

Id. ¶¶

9,

23, 26

. On M

ay 28,

2011

Range

began

const

ructin

g the

access

roads

and p

ad site

for th

e well.

Id. ¶

25.

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On Ju

ly 1, 2

011, th

e Neuh

ards, b

y and

throug

h coun

sel, no

tified

Range

that

it was

the Ne

uhards

’ posi

tion t

hat Ra

nge ha

d faile

d to c

omme

nce a w

ell on

the

Neuha

rds’ “

Lease

d Prem

ises,”

withi

n the

five y

ear pr

imary

term

of the

Lease

, and

theref

ore, th

at the

Lease

expir

ed by

its ow

n term

s. Pls

.’ SOF

, ¶ 12.

Rang

e

respon

ded by

letter

dated

July

7, 2011

, statin

g that

it bel

ieved

that it

main

tained

the

Lease

by th

e com

mence

ment

of a w

ell on

acreag

e unit

ized w

ith th

e Neuh

ards’

Lease

d Prem

ises p

rior to

the e

xpirat

ion of

the L

ease’s

prim

ary ter

m.

Range

then

contin

ued its

devel

opment

of th

e prop

erties

. Betw

een M

ay 28

and Se

ptemb

er 15,

2012,

Range

drille

d thre

e wells

that e

xtend

in dif

ferent

direct

ions fr

om th

e sam

e initia

l well

pad, ut

ilizing

conte

mpora

ry hor

izonta

l drill

ing

techno

logy n

ot ava

ilable i

n Penn

sylvan

ia at th

e time

the L

ease w

as sig

ned. S

ee

Def.’s

SOF,

¶¶ 32–

51. T

he we

llbore

s of tw

o of th

e three

wells

pass u

nder a

nd

throug

h the

Neuha

rds’ 4

7 acre

s. Id.

¶ 51.

As of

Decem

ber 20

12, Ra

nge ha

d

expend

ed app

roxim

ately

$4,000

,000 i

n conn

ection

with

drillin

g and

comple

ting t

he

wells.

Id. ¶

49.

II.DI

SCUS

SION

A.Le

gal St

anda

rds

1.Su

mmary

Judgm

ent St

andard

Summ

ary ju

dgment

is app

ropria

te when

“there

is no

genuin

e disp

ute as

to

5

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any m

ateria

l fact a

nd the

mova

nt is e

ntitled

to a j

udgme

nt as

a matte

r of la

w.” F

ED.

R.CIV

.P.56

(a); C

elotex

Corp.

v. Ca

trett,

477 U.

S. 317

, 330 (

1986).

A ge

nuine

issue

of ma

terial

fact ex

ists on

ly if “

the ev

idence

is suc

h that

a reas

onable

jury

could

find f

or the

nonm

oving

party.

” Ande

rson v

. Libe

rty Lo

bby, In

c., 477

U.S.

242, 24

8 (198

6). W

hen th

e cour

t consi

ders th

e part

ies’ a

rgume

nts, “[

t]he e

videnc

e

of the

non-m

ovant

is to b

e belie

ved an

d all j

ustifia

ble in

ferenc

es are

to be

draw

n in

his fa

vor.”

Id. at

255.

The b

urden

of est

ablish

ing th

e none

xisten

ce of

a “gen

uine is

sue” is

on th

e

party

movin

g for

summa

ry jud

gment

. In r

e Bres

sman,

327 F

.3d 22

9, 237

(3d Ci

r.

2003)

(inter

nal cit

ations

omitte

d). T

he mo

ving p

arty m

ay me

et this

burde

n by

either

(1) su

bmitti

ng pos

itive e

videnc

e that n

egates

an es

sential

eleme

nt of

the

nonmo

ving p

arty’s

claim

; or (2

) dem

onstra

ting t

hat th

e nonm

oving

party’

s

eviden

ce is i

nsuffic

ient to

estab

lish an

essen

tial ele

ment

of the

nonm

oving

party’

s

case.

Id. at

331.

In dec

iding

the m

erits o

f a pa

rty’s m

otion

for su

mmary

judgm

ent, th

e cour

t’s

role is

not to

evalu

ate th

e evid

ence a

nd dec

ide th

e truth

of th

e matte

r, but

to

determ

ine wh

ether

there

is a ge

nuine

issue

for tri

al or w

hether

judgm

ent as

a matte

r

of law

is pro

per. A

nderso

n, 477

U.S.

at 249.

The

standa

rd by

which

the c

ourt

decide

s a su

mmary

judgm

ent m

otion

does n

ot cha

nge wh

en the

partie

s file c

ross-

6

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motio

ns. W

eissm

an v. U

nited

States

Posta

l Serv

., 19 F

. Supp

. 2d 25

4, 259

(D.N.

J.

1998).

When

rulin

g on c

ross-m

otions

for su

mmary

judgm

ent, th

e cour

t must

consid

er the

moti

ons in

depend

ently,

Willi

ams v

. Phil

adelph

ia Hous

ing Au

thority

,

834 F.

Supp.

794, 7

97 (E.

D. Pa.

1993)

, aff’d

, 27 F.

3d 560

(3d C

ir. 199

4), an

d view

the ev

idence

prese

nted f

or eac

h moti

on in

the lig

ht mo

st favo

rable t

o the

nonmo

ving p

arty.

See M

atsush

ita Ele

c. Indu

s. Co.,

Ltd. v.

Zenit

h Radi

o Corp

.,

475 U.

S. 574

, 587 (

1986).

2.Ru

les of

Contr

act Co

nstruc

tion

The C

ourt ex

ercise

s dive

rsity j

urisdi

ction o

ver th

is case

, and t

herefo

re sta

te

substa

ntive

law ap

plies.

4 See,

e.g., E

rie R.

Co. v.

Tomp

kins, 3

04 U.S

. 64, 91

–92

(1938)

. Unde

r Penn

sylvan

ia law

, “a lea

se is i

n the

nature

of a c

ontrac

t and i

s

contro

lled by

princ

iples

of con

tract l

aw.”

T.W. P

hillip

s Gas

& Oil

Co. v.

Jedli

cka,

615 Pa

. 199, 2

08, 42

A.3d

261, 26

7 (201

2). A

ccordi

ngly, “

[t]he o

bject i

n

interp

reting

instru

ments

relati

ng to

oil an

d gas

intere

sts, li

ke any

writte

n

instru

ment,

‘is to

ascer

tain an

d effe

ctuate

the in

tentio

n of th

e part

ies.’”

4 “In t

he abs

ence o

f a co

ntroll

ing de

cision

by th

e Supr

eme C

ourt o

f Penn

sylvan

ia , a

federa

l court

apply

ing th

at state

’s subs

tantiv

e law m

ust pr

edict h

ow Pe

nnsylv

ania’s

highe

st cour

two

uld de

cide”

an iss

ue. B

errier

v. Sim

plicity

Mfg.

, Inc.,

563 F.

3d 38,

45–46

(3d C

ir. 200

9). “I

npre

dictin

g how

the h

ighest

court

of th

e state

would

resol

ve the

issue,

[the C

ourt] m

ust co

nsider

releva

nt sta

te prec

edent,

analo

gous d

ecisio

ns, co

nsider

ed dic

ta, sch

olarly

works

, and a

ny oth

errel

iable d

ata ten

ding c

onvinc

ingly

to sho

w how

the h

ighest

court

in th

e state

would

decid

e the

issue

at hand

.” Id.

at 46

(inter

nal qu

otatio

ns om

itted).

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Szyma

nowski

v. Bra

ce, 20

09 Pa.

Super

. 218, 9

87 A.2

d 717,

720 (

Pa. Su

per. C

t.

2009)

(quoti

ng He

ss v. J

ones, 3

35 Pa.

569, 7

A.2d

299 (1

939)).

“It is

a gene

rally

accept

ed pro

positio

n that

when

the ter

ms of

a writi

ng are

plain

and un

ambig

uous, t

here is

no ro

om fo

r inter

pretati

on or

constru

ction s

ince

the on

ly pur

pose o

f judic

ial con

structio

n is to

remo

ve dou

bt and

uncer

tainty.

” 11

RICHA

RDA.

LORD

,WILL

ISTON

ON CO

NTRA

CTS§

30:4

(4th e

d. 2013

); see

also

Steuar

t v. M

cChes

ney, 49

8 Pa. 4

5, 48–4

9, 444

A.2d 6

59, 66

1 (198

2). “T

he

meani

ng of

an una

mbigu

ous co

ntract

prese

nts a q

uestio

n of la

w. . . .

” Lesk

o v.

Frankf

ord Ho

sp.–B

ucks C

nty., 6

09 Pa.

115, 1

24, 15

A.3d

337, 34

2 (201

1). T

he

“focus

. . . is

upon

the ter

ms of

the a

greem

ent as

manif

estly e

xpress

ed, ra

ther th

an

as, pe

rhaps,

silent

ly int

ended.

” Steu

art, 44

4 A.2d

at 661

.

A cour

t must

consi

der th

e text

as a w

hole w

hen co

nstrui

ng the

langua

ge’s

operat

ive ef

fect.

Contr

ans, In

c. v. R

yder T

ruck R

ental,

Inc., 8

36 F.2

d 163,

169 (

3d

Cir. 19

87). “

[A]ll

provis

ions in

the a

greem

ent wi

ll be c

onstru

ed tog

ether

and ea

ch

will b

e give

n effe

ct . . .

we wi

ll not

interp

ret on

e prov

ision o

f a co

ntract

in a

manne

r whic

h resu

lts in

anothe

r port

ion be

ing an

nulled

.” LJL

Trans

p., Inc

. v. Pi

lot

Air Fr

eight

Corp.

, 599 P

a. 546,

560, 9

62 A.2

d 639,

647–4

8 (200

9) (in

ternal

citatio

ns om

itted).

“[A]

contr

act sh

ould b

e read

so as

to gi

ve me

aning

to all

of its

terms

when

read a

s an e

ntiret

y.” C

ontran

s, 836

F.2d a

t 169.

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The C

ourt as

sumes

genera

lly th

at the

parties

used

words

in th

eir “c

ommo

nly

accept

ed and

plain

mean

ing.”

Steuar

t, 444

A.2d a

t 661.

The

Court

also

recogn

izes, h

oweve

r, “tha

t every

agree

ment

is made

and t

o be c

onstru

ed wit

h due

regard

to th

e know

n char

acteri

stics o

f the b

usines

s to wh

ich it

relate

s . . . a

nd hen

ce

the lan

guage

used i

n a co

ntract

will b

e cons

trued

accord

ing to

its pu

rport i

n the

particu

lar bu

siness

.” Fra

nklin

Sugar

Ref. C

o. v. H

owell

, 274 P

a. 190,

118 A

. 109,

110 (1

922).

The C

ourt w

ill not

“rely

upon

a stra

ined c

ontriv

ancy”

to est

ablish

ambig

uity.

Steuar

t, 444

A.2d a

t 663.

Rath

er, th

e Cour

t seeks

to be

faith

ful to

the

meani

ng tha

t the p

arties

would

have

given

the lan

guage

at the

time o

f cont

ractin

g,

given

their r

espect

ive po

sitions

. Felm

ont Oi

l Corp

. v. Ca

vanaug

h, 300

Pa. S

uper.

520, 52

5, 446

A.2d 1

280, 12

83 (Pa

. Supe

r. Ct. 1

982).

B.Th

e Meri

ts

The la

nguage

of th

e Leas

e, Rang

e’s ac

tivitie

s, and

the po

sitions

of th

e

Parties

raise

three

legal i

ssues.

The

issues

are in

terrel

ated, a

s the r

esolut

ion of

the

first is

sue ne

cessar

ily im

pacts t

he res

olutio

n of th

e seco

nd and

third

issues

.

First,

did Ra

nge’s a

ctivitie

s prio

r to Ju

ne 21,

2011,

the e

xpirat

ion da

te of th

e

Lease

’s prim

ary ter

m, co

nstitu

te the

“comm

encem

ent of

a well”

as a m

atter o

f law?

If Ra

nge’s a

ctivity

prior

to Ju

ne 21,

2011

constit

uted t

he com

mence

ment

of a w

ell

as a m

atter o

f law,

then t

o exte

nd the

Lease

either

: secon

d, Rang

e must

have

9

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validl

y unit

ized t

he Ne

haurds

’ prop

erty u

nder th

e Leas

e’s ter

ms, or

, third

, Rang

e’s

actual

drilli

ng act

ivity

that w

as suf

ficien

t to co

nstitu

te the

comme

nceme

nt of

a well

was d

one “o

n the

Lease

d Prem

ises.”

5

The C

ourt fi

rst art

iculate

s the m

ateria

l port

ions o

f the L

ease a

nd the

ir

operat

ion, an

d then

addre

sses th

ese th

ree iss

ues se

riatim

.

1.Ma

terial

Provis

ions o

f the L

ease

Oil an

d gas

leases

typic

ally co

ntain

a prim

ary ter

m of

fixed

duratio

n,

expres

sed as

a num

ber of

years

. The

habend

um cla

use of

an oi

l and g

as lea

se,

which

gener

ally es

tablish

es the

prim

ary ter

m, de

scribe

s “the

durat

ion of

the in

terest

grante

d, subj

ect to

modi

ficatio

n by o

ther p

rovisio

ns con

tained

in the

lease

which

may p

rovide

for a

n exte

nsion

of the

lease.

” 3-27

EUGE

NEKU

NTZ, E

T AL.,

KUNT

Z,

LAW

OF OI

L AND

GAS §

27.1 (

2013).

Such

a leas

e will

termi

nate a

t the e

xpirat

ion

of its

prima

ry ter

m if t

he Le

ssee h

as not

engag

ed in

those

acts p

rescri

bed in

the

lease

that m

odify

the du

ration

or ac

tivate

a seco

ndary

term.

The L

ease s

ub ju

dice a

rticula

tes its

prim

ary ter

m as

follow

s:

1.1

It is a

greed

that th

is Agre

ement

shall

remain

in fo

rce fo

r a ter

mof

five y

ears fr

om th

e date

first w

ritten

above

(herei

nafter

desig

nated

“Prim

ary Te

rm”),

and s

hall co

ntinue

from

year to

year

therea

fter fo

rso

long a

s . . . t

he Le

ssee is

engag

ed in

a bona

fide a

ttempt

to sec

ure

5 The is

sues in

this c

ase re

late as

a logi

cal co

njunct

ion as

illust

rated:

Exten

sion o

f Leas

e = Co

mmenc

ement

AND (

on val

id Un

it OR o

n Leas

ed Pre

mises

).

10

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7

or res

tore th

e prod

uction

of oi

l, gas

and/or

coalb

ed me

thane

gas or

other

liquid

hydro

carbon

s by c

onduct

ing dr

illing

or rew

orking

operat

ions o

n the

Lease

d Prem

ises .

. . .

Def.’s

Br. S

upp. E

x 1, at

2, §1.

1 [her

einaft

er Le

ase].

The c

omme

nceme

nt cla

use of

the L

ease b

oth pr

escrib

es the

Lease

’s

autom

atic ter

minat

ion at

the en

d of it

s prim

ary ter

m (ab

sent th

e Less

ee’s a

ction t

o

extend

the L

ease)

and pr

ovides

the m

eans b

y whic

h the

Lesse

e can

activa

te the

second

ary ter

m of

the Le

ase:

8.1 U

nless

sooner

termi

nated

as oth

erwise

herei

n prov

ided, L

essee

shall c

omme

nce a w

ell on

the Le

ased P

remise

s or o

n a sp

acing

unit

contain

ing a p

ortion

of th

e Leas

ed Pre

mises

, with

in fiv

e (5)

years

from

the da

te first

writte

n abov

e and

shall d

rill sa

id we

ll with

due

dilige

nce.I

n the

event

the af

oresai

d well

is not

comme

nced w

ithin

such f

ive (5

) year

perio

d, thi

s Agre

ement

shall

be au

tomati

cally

termi

nated

in its

entir

ety, un

less L

essor

approv

es in

writin

g, thir

ty(30

) days

in ad

vance

of the

anniv

ersary

date o

f this A

greem

ent, th

econ

tinuat

ion of

this A

greem

ent on

a year

-to-ye

ar bas

is.

Lease

, §8.1 (

empha

sis ad

ded).

Read

togeth

er, th

ese tw

o prov

isions

allow t

he Le

ssee to

exten

d the

prima

ry

term

of the

Lease

beyon

d June

21, 20

11 if t

he Le

ssee c

omme

nced a

well o

n the

Lease

d Prem

ises o

r a un

it cont

aining

a port

ion of

the L

eased

Premi

ses be

fore th

e

expira

tion o

f the p

rimary

term.

6 If th

e Less

ee did

not fu

lfill th

ose co

nditio

ns, th

e

6 The L

essee

did no

t seek

an ext

ension

of th

e Leas

e in wr

iting n

or did

the L

essor

approv

eany

such

extens

ion. T

he pos

sibilit

y of e

xtendi

ng the

Lease

in th

is mann

er is n

ot at i

ssue.

11

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7

Lease

expir

ed by

its ow

n term

s at th

e end

of the

prim

ary ter

m.

2.Ra

nge “C

omme

nced a

Well”

as a M

atter o

f Law

The p

hrases

“cond

uct dr

illing

operat

ions”

and “c

omme

nce a w

ell,” a

s

utilize

d in t

his Le

ase, ar

e cons

trued

broadl

y to i

nclude

activ

ities o

ften p

erform

ed in

prepar

ation f

or dri

lling—

the ph

ysical

act o

f drill

ing be

fore th

e expi

ration

of th

e

prima

ry ter

m is n

ot a n

ecessa

ry pre

requis

ite to

extend

a leas

e. Th

is Cour

t recen

tly

decide

d this

partic

ular is

sue in

Roe v

. Chie

f Expl

oratio

n & De

velopm

ent LL

C,

4:11-c

v-0081

6, 2013

WL 4

083326

(M.D.

Pa. A

ug. 13

, 2013)

, findi

ng tha

t activ

ity

undert

aken i

n good

faith

in pr

eparat

ion to

drill

satisfi

ed a le

ase’s c

omme

nceme

nt

clause

. The

Court

cited

to lea

rned t

reatise

s that e

xplain

:

The g

eneral

rule i

s that a

ctual d

rilling

is unn

ecessa

ry, bu

t the lo

cation

of we

ll sites

, hauli

ng lum

ber on

the p

remise

s, erec

tion o

f derr

icks,

provid

ing a w

ater su

pply, m

oving

machi

nery o

n the

premi

ses an

dsim

ilar ac

ts prel

imina

ry to

the be

ginnin

g of th

e proc

ess of

drilli

ng,wh

en per

forme

d with

the b

ona fid

e inten

tion t

o proc

eed wi

th dil

igence

toward

the c

omple

tion o

f the w

ell, co

nstitu

te a co

mmenc

ement

orbeg

inning

of a w

ell or

drillin

g oper

ations

within

the m

eaning

of th

elea

se.

N ANC

YSAI

NT-PA

UL,S

UMME

RSOIL

AND G

AS§ 1

5:10 (

3d ed.

2013)

; see a

lso

Pemco

Gas, I

nc. v.

Berna

rdi, 5

Pa. D.

& C.

3d 85,

92, 19

77 WL

260 (

Pa. Co

m. Pl

.

1977).

Anot

her tre

atise s

tates:

Althou

gh the

re is s

ome li

mited

autho

rity to

the c

ontrar

y, in g

eneral

itapp

ears th

at the

courts

have b

een re

ady to

find t

he com

mence

ment

ofope

ration

s (or th

e purs

uit of

drilli

ng ope

ration

s) wher

e only

the m

ost

12

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modes

t prep

aratio

ns for

drilli

ng hav

e been

made

. . .

. . .

In bri

ef, dr

illing

operat

ions m

ay be

descri

bed as

any w

ork or

actua

lope

ration

s unde

rtaken

or co

mmenc

ed in

good f

aith fo

r the p

urpose

ofcar

rying

out an

y of th

e righ

ts, pri

vilege

s or d

uties

of the

lessee

under

alea

se, fo

llowe

d dilig

ently

and in

due c

ourse

by the

const

ructio

n of a

derric

k and

other

necess

ary str

ucture

s for th

e drill

ing of

an oi

l and g

aswe

ll, and

by th

e actu

al oper

ation o

f drill

ing in

the g

round.

P ATR

ICKH.

MART

IN&B

RUCE

M.KR

AMER

,WILL

IAMS

&MEY

ERS,O

IL AN

D GAS

LAW §

618.1

(2013

).

Pennsy

lvania

cases

adopt

this p

osture

as we

ll. Se

e, e.g.

, Hend

erson

v.

Ferrel

l, 183

Pa. 54

7, 38 A

. 1018

(1898)

; Bern

ardi, 5

Pa. D

. & C.

3d at 9

2–96;

see

also G

ood W

ill Hu

nting

Club, I

nc. v.

Range

Res.-A

ppalac

hia, L

LC, 4:

11-CV

-

1152, 2

013 W

L 2297

170, *1

7–18 (

M.D.

Pa. M

ay 24,

2013)

. For

examp

le, in

the

now se

minal

case

of Pe

mco G

as, In

c. v. B

ernard

i that c

ourt h

eld th

at the

defend

ant

“had c

omme

nced o

peratio

ns wit

hin th

e gene

rally

accept

ed me

aning

of tha

t phra

se.”

Berna

rdi,5

Pa. D.

& C.

3dat 9

5. In

the pe

riod f

rom th

ree m

onths

prior

to the

expira

tion o

f that l

ease to

the d

ay the

prim

ary ter

m exp

ired, t

he def

endant

surve

yed

the sit

e, bega

n nego

tiation

s conc

erning

the lo

cation

of th

e site

and th

e locat

ion of

the rig

ht-of-

way w

ith th

e plain

tiffs, a

cquire

d a rig

ht-of-

way o

ver a n

eighbo

ring

proper

ty, hi

red co

ntract

ors to

do th

e exca

vation

and d

rilling

work,

appli

ed for

and

13

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7

acquir

ed a d

rilling

perm

it, and

place

d pipe

on th

e site.

7 Id. a

t 95–9

6.

Similar

ly, th

e Supr

eme C

ourt o

f Penn

sylvan

ia has

held t

hat th

e prep

arator

y

action

s of st

aking

the lo

cation

of a w

ell and

attem

pting

to unl

oad lu

mber

at the

site

on the

final d

ay of

the pr

imary

term

constit

uted d

rilling

opera

tions

suffic

ient to

extend

the le

ase. H

enders

on, 38

A. at

1019.

This a

ctivity

comp

rised t

he

comme

nceme

nt of

drillin

g oper

ations

as a m

atter o

f law.

Id.

In th

e case

befor

e the C

ourt, R

ange’s

activ

ities b

efore

the ex

piratio

n of th

e

Lease

’s prim

ary ter

m on

June 2

1, 2011

inclu

ded, bu

t were

not li

mited

to: (1

)

obtain

ing re

gulato

ry per

mits a

nd app

rovals

from

govern

ment

agenci

es; (2

) staki

ng

the lo

cation

for th

e well

drill s

ite; (3

) nego

tiating

agree

ments

with

Plaint

iffs an

d

neighb

oring

landow

ners re

gardin

g drill

ing op

eratio

ns; (4

) obta

ining

easem

ents; (

5)

removi

ng tim

ber; an

d (6)

constru

cting r

oad ac

cess a

nd the

pad s

ite for

the w

ell to

begin

drillin

g. Th

ese ac

tivitie

s are

suffic

ient to

const

itute t

he com

mence

ment

of a

well a

s a m

atter o

f law.8 S

ee, e.g

., Bern

ardi, 5

Pa. D

. & C.

3d at 9

5–96;

Hende

rson,

38 A.

at 1018

–19; S

UMME

RSOIL

AND G

AS§ 1

5:10;

WILL

IAMS

&MEY

ERS,O

IL AN

D

7 Addit

ional c

ases o

f pers

uasive

autho

rity di

scusse

d by t

he cou

rt in t

he Be

rnardi

decis

ioninc

lude: A

llen v.

Cont’

l Oil C

o., 255

So.2d

842 (

La. 19

71); W

alton v

. Zatk

off, 37

2 Mich

. 491,

127 N.

W.2d

365 (1

964); P

eterso

n v. R

obinso

n Oil &

Gas C

o., 356

S.W.

2d 217

(Tex.

1962)

;Jon

es v. M

oore , 3

38 P.2

d 872

(Okla

. 1959)

.

8 The P

laintiff

s do n

ot con

test th

at the

Defen

dant’s

action

s were

done

in goo

d faith

and

that th

e Defe

ndant

dilige

ntly c

ontinu

ed the

drilli

ng ope

ration

s.

14

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GASL

AW § 6

18.1.

3.Un

itizatio

n

Even

though

Range

’s activ

ities in

begin

ning t

he we

ll on t

he nei

ghbori

ng

Null p

ropert

y satis

fied t

he com

mence

ment

clause

as a m

atter o

f law,

by the

terms

of the

Lease

those

drilli

ng act

ivities

must

have

been p

reform

ed eith

er “on

the

Lease

d Prem

ises o

r on a

spaci

ng uni

t conta

ining

a port

ion of

the L

eased

Premi

ses”

in ord

er to

extend

the L

ease.

Lease

, § 8.1

. Rang

e’s ac

tivitie

s prio

r to th

e

expira

tion o

f the p

rimary

term

were

not “o

n the

Lease

d Prem

ises.”

9 Id.

Conse

quentl

y, they

must

have

been p

erform

ed “on

a spac

ing un

it cont

aining

a

portio

n of th

e Leas

ed Pre

mises

” in or

der to

exten

d the

Lease

. Id.

Unitiz

ation, a

comm

on pra

ctice o

f the o

il and

gas in

dustry

that c

reates

units

contem

plated

in th

e Leas

e, “ref

ers to

the c

onsoli

dation

of m

ineral

or lea

sehold

intere

sts in

oil o

r gas

coveri

ng a c

ommo

n sour

ce of

supply

.”10 Amo

co Pro

d. Co. v

.

Heim

ann, 90

4 F.2d

1405,

1410

(10th

Cir. 19

90). T

he con

solida

ted un

it of

“lease

hold i

nteres

ts cove

ring a

ll or p

art of

a com

mon s

ource

of sup

ply . .

. [serv

es]

9 The C

ourt el

aborat

es on

this is

sue in

the f

inal su

bsectio

n (4)

below

.

10 “Alth

ough t

he ter

ms ‘p

ooling

’ and

‘unitiz

ation’

are fre

quentl

y used

inter

change

ably,

more

proper

ly ‘po

oling’

mean

s the b

ringin

g toge

ther o

f small

tracts

suffic

ient fo

r the g

rantin

g of

a well

permi

t unde

r appl

icable

spaci

ng rul

es wh

ereas

‘unitiz

ation’

. . . m

eans th

e join

operat

ionof

all or

some p

art of

a prod

ucing

reserv

oir.”

6-9 W

ILLIA

MS&M

EYER

S,OIL

AND G

ASLA

901.

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to ma

ximize

produ

ction b

y effic

iently

drain

ing th

e rese

rvoir.”

1 B.

KRAM

ER&P

.

MART

IN,T

HELA

W OF

POOL

ING A

ND UN

ITIZA

TION§

1.02 (

3d ed.

2013)

.

Furth

ermore

, “the

goals o

f unit

izatio

n are

conser

ving r

esourc

es by

preven

ting

waste

and p

rotect

ing lan

downer

s’ corr

elativ

e righ

ts.”11 H

eimann

, 904 F

.2d at

1410–1

1. Under

a typi

cal oi

l and g

as lea

se, ab

sent g

overnm

ent in

volvem

ent, th

e

lessee

’s only

autho

rity to

unitiz

e the le

ased p

remise

s with

other

lands

is deri

ved

from

the pe

rmiss

ion gr

anted

to the

lessee

by th

e lesso

r, expr

essed

in the

terms

of

the lea

se agr

eement

. Amo

co, 90

4 F.2d

at 141

1 (citi

ng KR

AMER

&MAR

TIN, §8

.01).

Once

a lesso

r gran

ts the

lessee

that i

nteres

t in a l

ease, h

oweve

r, the

lessee

posse

ss

the po

wer to

unitiz

e the le

ssor’s

inter

est wi

thout

furthe

r cons

ent. I

d.

Conse

quentl

y, a les

sor ca

n lim

it that

autho

rity in

any w

ay in

the ter

ms of

the

agreem

ent to

prote

ct its i

nteres

ts. Th

e lesse

e reta

ins fre

edom

of con

tract a

nd is n

ot

oblige

d to c

ontrac

t with

a less

or dem

anding

unrea

sonabl

e or o

bjectio

nable

unitiza

tion c

onditio

ns. N

everth

eless,

when

a lesse

e sign

s an o

il and

gas lea

se, its

unitiza

tion a

uthori

ty ext

ends o

nly so

far a

s the te

rms o

f that l

ease p

rovide

.

“Desp

ite the

attitu

de tha

t the p

ooling

clause

is to

be lib

erally

const

rued, e

ach

11 “Corr

elativ

e righ

ts are

rights

which

one o

wner

posses

ses in

a com

mon s

ource

of sup

plyin

relatio

n to t

hose r

ights p

ossess

ed by

other

owner

s in th

e sam

e com

mon s

ource

of sup

ply.”

Heim

ann, 90

4 F.2d

at 141

1 n.4 (

quotin

g Unit

ed Pet

roleum

Explo

ration

v. Pre

mier

Res.,

511 F.

Supp.

127, 1

29 (W

.D. Ok

la. 198

0)) (in

ternal

quota

tions

omitte

d).

16

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poolin

g clau

se mu

st be c

areful

ly exa

mined

for sp

ecific

provi

sions

that re

strict t

he

power,

presc

ribe th

e mann

er in

which

it ma

y be e

xercis

ed, an

d desc

ribe th

e

conseq

uence

of its

exerci

se.” 4

-48KU

NTZ,L

AW OF

OIL A

ND GA

S§ 48

.3(a)(

1).

The c

oncret

e issue

befor

e the C

ourt is

wheth

er Ra

nge’s d

esigna

tion o

f a un

it

of app

roxim

ately

three

hundre

d nine

ty-fiv

e (395

) acre

s exce

eded i

ts unit

izatio

n

author

ity un

der th

e Leas

e. Th

e Neuh

ards c

ontend

that R

ange w

as lim

ited to

creatin

g a un

it of 3

50 acr

es by

the ter

ms of

the L

ease.

I.Ma

terial

Provi

sions

Regu

lating

Unitiz

ation

Autho

rityan

d Well

Spaci

ng

The u

nitiza

tion p

ortion

of th

e Leas

e prov

ides:

Lesse

e shal

l have

the r

ight at

any t

ime o

r time

s to po

ol and

consol

idate t

he Le

ased P

remise

s, in w

hole o

r in pa

rt or a

s to an

ystra

tum or

strata

, with

lands

or lea

ses ad

jacent

to or

in th

e imme

diate

vicini

ty of

the Le

ased P

remise

s, so a

s to co

nstitu

te a un

it or u

nits fo

rthe

purpo

se of

enteri

ng, wi

th the

owner

s and/

or les

sees, i

nto jo

intope

rating

agree

ments

provi

ding f

or the

joint

opera

tion a

nddev

elopm

ent of

the L

eased

Premi

ses or

portio

ns the

reof w

ithadj

oining

lands

to pre

vent th

e drill

ing of

an ex

cess n

umber

of we

lls or

of we

lls loc

ated t

oo clo

se to

the bo

undary

of th

e Leas

ed Pre

mises

,pro

viding

that s

aid un

it or p

ool is

not ar

bitrar

y and

the ac

reage

constit

uting

the un

it or p

ool is

compri

sed of

a mini

mum

of 50%

of th

eLe

ssor’s

acrea

ge OR

Lesso

r has

approv

ed suc

h unit

izatio

n in w

riting

to Le

ssee.

In the

absen

ce of

any sp

acing

order,

rule,

or reg

ulatio

n of

the Pe

nnsylv

ania D

epartm

ent of

Envir

onment

al Prot

ection

, any s

uchuni

t or u

nits s

hall b

e limi

ted in

size to

the a

rea su

rround

ing ea

ch we

llpro

vided

for in

Sectio

n 9.2 a

bove.

Lease

, § 12.

1.

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Sectio

n 12.2

furth

er pro

vides

that “d

rilling

. . . op

eratio

ns upo

n . . . a

ny suc

h

unit sh

all be

treate

d, for

all pur

poses

hereun

der, as

opera

tions

upon .

. . the

Lease

d

Premi

ses.”

Lease

, § 12.

2. Sec

tion 9

.2, how

ever, l

imits

the m

aximu

m siz

e of e

ach

unit cr

eated

under

the Le

ase, as

it rea

ds:

Lesse

e shal

l not

be req

uired

under

this p

rovisio

n to d

rill m

ore we

llstha

n requ

ired o

r allo

wed u

nder a

ny spa

cing o

rder, r

ule, or

regul

ation

of the

Penns

ylvani

a Depa

rtment

of En

vironm

ental P

rotect

ion, or

inthe

absen

ce of

any su

ch ord

er, m

ore th

an on

e well

in the

. . . (i

v)thr

ee hu

ndred

fifty

(350)

acres

aroun

d each

well f

rom wh

ich ga

s isbei

ng pro

duced

as the

princ

ipal p

roduct

from

depths

above

the to

p of

the On

ondaga

Form

ation.

Lease

, § 9.2

(emp

hasis a

dded).

The N

euhard

s subm

it that

, by th

e plain

langua

ge of

the lea

se, th

e acre

age

amoun

ts artic

ulated

in se

ction 9

.2 oper

ate so

as to

limit t

he ma

ximum

exten

t of a

unit’s

size to

the 3

50 acr

es sur

roundi

ng eac

h well,

based

on th

e allu

sion t

o sect

ion

9.2 in

sectio

n 12.1

. Unde

r this c

onstru

ction, R

ange e

xceede

d its u

nitiza

tion

author

ity.12

In con

trast,

Range

conte

nds th

at read

ing se

ctions

9.2 an

d 12.1

toget

her

limits

Range

’s pool

ing au

thority

in th

ree wa

ys: (1

) the u

nit m

ust no

t be a

rbitra

ry;

(2) th

e pool

ed uni

t must

be co

mprise

d of a

mini

mum

of 50%

of th

e Neuh

ards’

12 The N

euhard

s did

not ap

prove

Range

’s unit

izatio

n in w

riting

as con

templa

ted by

the

Lease

.

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acreag

e; and,

(3) th

e total

acreag

e in th

e unit

must

not ex

ceed 3

50 acr

es

surrou

nding

each

well i

n the

unit.

Range

subm

its tha

t base

d on t

his lan

guage,

it

has au

thority

to cr

eate a

unit c

ontain

ing th

ree we

lls wit

h an a

creage

limitat

ion of

1050 a

cres (t

he pro

duct o

f 3 we

lls wit

h 350

acres

around

each)

. Unde

r Rang

e’s

interp

retatio

n, the

exerci

se of

its uni

tizatio

n auth

ority

was p

roper.

The L

ease d

oes co

ntemp

late th

e poss

ibility

of m

ore th

an one

well p

er uni

t,

such t

hat Ra

nge’s i

nterpr

etatio

n is p

lausib

le. Th

e Leas

e, how

ever, r

equire

s the

Lesse

e to ob

tain th

e Less

or’s p

ermiss

ion in

order

to dr

ill mo

re tha

n one

well p

er

unit.

The L

ease p

rovide

s:

Well s

pacing

shall

not be

closer

than

one (1

) well

per sp

acing

unit as

indica

ted in

Sectio

n 9.2,

unless

Lesse

e has

obtain

ed wr

itten a

pprova

lfro

m the

Lesso

r, whic

h shal

l not

be unr

easona

bly wi

thheld

or de

layed

. . . .

Lease

, § 10.

2.

ii.Ra

nge E

xceede

d Its U

nitiza

tion A

uthori

ty

Each

Parties

’ cons

tructio

n of th

e Leas

e is pa

rtly ap

t and p

art in

error

. The

Lease

’s prov

isions,

partic

ularly

conce

rning

unitiza

tion a

nd we

ll spac

ing, m

anifes

t

at leas

t three

inter

ests th

at conf

lict in

the c

urrent

dispu

te: (1)

the N

euhard

s’ inte

rest

in ens

uring

their m

ineral

estate

comp

rises a

n appr

opriate

perce

ntage

of any

unit

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produc

ing oi

l or g

as, so

that t

heir ro

yalties

are n

ot dil

uted;13 (2

) all P

arties

(prim

arily

the lan

downer

s) inte

rests i

n mini

mizin

g surf

ace di

srupti

on fro

m

drillin

g;14 and, (

3) Ra

nge’s i

nteres

t in dr

illing

wells

as eff

icientl

y as e

conom

ically

possib

le.15 All t

hree o

f these

inter

ests a

re rep

resent

ed in

varyin

g degr

ee in

differ

ent

terms

of th

e Leas

e, and

the co

nfluen

ce of

these

intere

sts is

the fo

cal po

int fo

r

resolu

tion o

f the c

urrent

dispu

te.

a.Th

e Leas

e’s Pl

ain Te

rms L

imit M

aximu

m Un

itSiz

e to 35

0 Acre

s Abse

nt Per

missi

on

The C

ourt h

olds th

at Rang

e’s un

it desi

gnatio

n viol

ates it

s unit

izatio

n

author

ity un

der th

e plain

and u

nambig

uous te

rms o

f the L

ease, b

ecause

the L

ease is

clear

that a

unit ca

nnot b

e large

r than

350 ac

res su

rround

ing ea

ch we

ll in t

he uni

t,

and a u

nit ca

nnot co

ntain

more

than o

ne we

ll with

out th

e perm

ission

of th

e Less

or,

13 This i

nteres

t is ef

fectua

ted in

the o

peratio

n of th

e Leas

e’s ter

ms, fo

r exam

ple,

constru

ing to

gether

sectio

ns 12.

1, 9.2,

and 10

.2, as

the Co

urt su

bseque

ntly e

labora

tes.

14 This i

nteres

t is ex

presse

d in t

he Le

ase’s l

anguag

e, for

examp

le: “L

essee

agrees

to dr

illsuc

h wells

as a r

easona

bly pr

udent

operat

or wo

uld dr

ill . . .

to de

velop

and pr

oduce

from

theLe

ased P

remise

s effic

iently

, econo

mical

ly, wi

thout

waste

, and t

o the

best ad

vantag

e of L

essor.

” Le

ase, §

10.1.

The in

terest

is als

o expr

essed

in thi

s langu

age: “[

t]he L

eased

Premi

ses ar

econ

tinuou

sly us

ed for

dome

stic, ag

ricult

ure, re

creatio

nal, an

d othe

r purp

oses, a

nd ma

ny act

ivities

may b

e in pr

ogress

on th

e lands

. Henc

e, Less

ee sha

ll cond

uct its

opera

tions

so as

to mi

nimize

interf

erence

with

the ot

her ac

tivitie

s on t

hese L

eased

Premi

ses.”

Lease

, § 7.1

.

15 This i

nteres

t is ev

ident

as a te

xtual m

atter th

rougho

ut the

Lease

, most

pertin

ently

in the

introd

uction

: “Less

ee is d

esirou

s of le

asing

Lesso

r’s oi

l, gas

and co

albed

rights

conta

ined i

n, on,

and un

der th

e Leas

ed Pre

mises

for th

e purp

ose of

explo

ring f

or . . .

drilli

ng, op

eratin

g, prod

ucing

and re

movin

g oil,

gas, co

albed

metha

ne gas

and l

iquid

hydroc

arbons

there

from.

” Leas

e,Int

roduct

ion.

20

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which

Range

did n

ot obt

ain. S

teuart

, 444 A

.2d at

661; se

e also

Trans

-West

ern

Petrol

eum, In

c. v. U

.S. Gy

psum

Co., 5

84 F.3

d 988,

994–9

5 (10t

h Cir.

2009)

(Holl

oway,

J.) (a

ffirmi

ng a d

istrict

court’s

decis

ion fin

ding a

lease

expire

d by i

ts

terms

at the

end o

f its p

rimary

term

becaus

e the d

efenda

nt’s u

nitiza

tion s

cheme

contra

dicted

the u

nambig

uous te

rms o

f the le

ase).

The N

euhard

s’ inte

rest in

ensur

ing th

eir lan

d (and

royal

ty pay

ment)

compri

ses an

appro

priate

perce

ntage

of any

unit p

roduci

ng oil

and g

as to

is

protec

ted by

mult

iple p

rovisio

ns, bo

th tho

se ma

ndatin

g a m

inimu

m uti

lizatio

n of

the Ne

uhards

’ land

(sectio

n 12.1

) and

a maxi

mum

size o

f any

unit (s

ection

9.2).

Sectio

n 12.1

creat

es the

unam

biguou

s requi

rement

that t

he Le

ssee u

se a m

inimu

m

of 50%

of th

e Neuh

ards’ 4

7 acre

s in an

y unit

inclu

ding t

he Ne

uhards

’ land.

This

ensure

s that t

he Ne

uhards

’ land

will b

e inclu

ded in

a unit

in at

least a

mini

mum

amoun

t the N

euhard

s’ deem

ed suf

ficien

t at th

e time

of sig

ning t

he con

tract,

namely

50% of

their

47 ac

res.

Furth

ermore

, readi

ng sec

tions

9.2 an

d 10.2

toget

her, it

is cle

ar the

Lease

e

cannot

creat

e a un

it larg

er tha

n 350

acres

by dri

lling m

ore th

an one

well w

ithout

the Ne

uhards

’ perm

ission

. This

provi

sion p

rotect

s the N

euhard

s’ inte

rest fr

om

diluti

on by

preven

ting R

ange f

rom in

cludin

g the

Neuha

rds’ la

nd in

a unit

larger

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than t

he 350

acre

units c

ontem

plated

by th

e Leas

e with

out th

e Neuh

ards’ c

onsent

.16

b.En

forcin

g the

Lease

’s Plain

Term

s Does

Not L

eadto

Absur

d Resu

lts and

Is Ha

rmoni

ous wi

th the

Lease

as a W

hole

Range

argue

s that t

his re

ading

of the

Lease

’s plain

terms

is ina

ppropr

iate

becaus

e it co

nflicts

with

the se

cond a

nd thi

rd int

erests

enum

erated

above

, name

ly

the Pa

rties’ i

nteres

t in m

inimi

zing s

urface

disru

ption

and Ra

nge’s i

nteres

t in

develo

ping r

esourc

es in

the m

ost ec

onomi

cally

efficie

nt ma

nner.

These

consid

eratio

ns are

inter

relate

d. Ra

nge as

serts t

he Co

urt’s r

eading

of th

e Leas

e

underm

ines th

ose in

terest

s and

leads

to an

absurd

resul

t. The

Court

’s cons

tructio

n

of the

Lease

is, ho

wever

, both

a prop

er rea

ding o

f the L

ease’s

clear

and

unamb

iguous

terms

, and d

oes no

t lead

to abs

urd re

sults w

hen co

nstrui

ng the

terms

in the

conte

xt of

the tim

e that t

he Par

ties sig

ned th

e Leas

e. See

Cavan

augh, 4

46

A.2d a

t 1283

(“[I]t

is the

inten

tion o

f the p

arties

at th

e time

of en

tering

in th

ereto

that g

overns

, and s

uch in

tentio

n is to

be ga

thered

from

a read

ing of

the e

ntire

contra

ct.”).

The in

terest

in m

inimi

zing s

urface

disru

ption

from

drillin

g is e

xpress

ed in

aspira

tional

langua

ge thr

oughou

t the L

ease.

For e

xample

, sectio

n 10.1

charg

es the

16 Range

also c

ontinu

ally as

serts t

hat “c

apping

[a] u

nit siz

e at 3

50 acr

es is a

rbitra

ry in

andof

itself.”

Def.

’s Br. O

pp’n 9

, Jan. 4

, 2013,

ECF N

o. 29.

This a

rgume

nt has

no m

erit in

consid

eratio

n of th

e unam

biguou

s langu

age th

e Part

ies’ a

greed

to at t

he tim

e of si

gning

theLe

ase.

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Lesse

e with

a duty

to “d

evelop

and p

roduce

from

the Le

ased P

remise

s effic

iently

,

econom

ically

, with

out wa

ste, an

d to t

he bes

t advan

tage o

f the L

essor.

” Sect

ion

12.1 a

rticula

tes a d

esire

to “pr

event

the dr

illing

of an

excess

ive nu

mber

of we

lls or

of we

lls too

close

to the

bound

ary of

the L

eased

premi

ses.”

Consi

stent

with t

his

expres

sed as

piratio

nal pu

rpose,

Range

argue

s that “

the in

tent fo

r Sect

ion 10

.2 of

the Le

ase is

to pro

tect th

e Less

ors fro

m unr

easona

ble su

rface

intrus

ions re

sultin

g

from

the co

nstruc

tion a

nd ope

ration

of nu

merou

s pad

sites o

n the

leased

prem

ises.”

Def.’s

Br. S

upp., a

t 17.

It is c

lear fr

om th

e langu

age of

the L

ease th

at the

Parties

inten

ded to

minim

ize su

rface

disrup

tion.

Const

ruing

the Le

ase as

a whol

e, how

ever, i

t is als

o

clear

that th

e requ

ireme

nt of

permi

ssion

in sec

tion 1

0.2 no

t only

encou

rages

minim

al surf

ace di

srupti

on, bu

t also

unmista

kably

protec

ts the

Neuha

rds’ in

terest

from

being

dilute

d in a

unit l

arger

than 3

50 acr

es wit

hout th

eir pe

rmiss

ion. A

single

term

may s

erve m

ultipl

e purp

oses.

Moreo

ver, w

hen th

e word

s are

clear

and

unamb

iguous

, a Co

urt wi

ll not

enforc

e one

party’

s rende

ring o

f a pr

ovisio

n’s in

tent

over th

e clea

r langu

age of

the c

ontrac

t. See

, e.g.,

Steuar

t, 444

A.2d a

t 661.

Range

’s argu

ment

rests o

nly on

the c

ontinu

ed ass

ertion

that t

he per

missi

on

provis

ion is

meani

ngless

becau

se non

e of R

ange’s

actua

l drill

ing ac

tivitie

s have

impac

ted th

e surf

ace of

the N

euhard

s’ prop

erty.

Never

theles

s, Rang

e does

not

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addres

s the p

rovisio

n’s pr

otectio

n of th

e Neuh

ards’ p

roport

ion of

any u

nit cr

eated

under

the lea

se, no

r the p

aramo

unt co

nsider

ation:

the pl

ain an

d unam

biguou

s

words

of th

e Leas

e requ

iring p

ermiss

ion. S

ee id.

It is tr

ue tha

t the N

euhard

s’ may

not ha

ve bee

n able

to re

asonab

ly wit

hhold

consen

t base

d on s

urface

disru

ption

motiv

es, an

d that

they

may h

ave gi

ven co

nsent

to dri

ll more

than

one we

ll if a

sked.

These

facts

, howe

ver, do

not o

bviate

the

Lease

’s expr

ess re

quirem

ent fo

r perm

ission

, nor w

as sur

face d

isrupti

on the

only

intere

st prot

ected

by the

perm

ission

requi

rement

.17 In th

e Defe

ndant’

s own

words

,

“[a] c

ontrac

t shoul

d not

be int

erpret

ed in

a mann

er tha

t rende

rs prov

isions

meani

ngless

, super

fluous

, unrea

sonabl

e, cont

radicto

ry, or

would

lead t

o absu

rd

result

s.” D

ef.’s B

r. Repl

y Pls.’

Br. O

pp’n 6

, Jan. 1

8, 2013

, ECF

No. 33

(citin

g,

inter

alia, L

esko, 1

5 A.3d

at 342

–43).

Dismi

ssing

the pl

ain lan

guage

of the

permi

ssion

requir

ement

would

be co

ntrary

to fir

mly e

stabli

shed l

aw by

rende

ring

the pr

ovisio

n mean

ingles

s, and

the Co

urt de

clines

to do

so.

Moreo

ver, ev

en if p

ermiss

ion wa

s unne

cessar

y by t

he Le

ase’s l

anguag

e or if

it was

grante

d, Rang

e has

not de

monst

rated

its cur

rent u

nit co

nfigur

ation i

s

17 The P

arties

dispu

te whet

her th

e Neuh

ards w

ould h

ave gi

ven co

nsent

to allo

w more

than o

ne we

ll in a

unit.

Barba

ra Ne

uhard

indica

tes sh

e woul

d have

requi

red m

ore in

forma

tion

and de

libera

tion b

efore

decidi

ng the

matte

r. See

Pls.’

Br. Su

pp., E

x. F, D

ep. Ba

rbara

Neuha

rd,52–

53. M

oreove

r, it ap

pears t

he Ne

uhards

’ coul

d have

reaso

nably

withhe

ld con

sent fo

r the

purpos

e of p

rotect

ing ag

ainst t

he per

ceived

dilut

ion of

their

inter

est in

a unit

.

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approp

riate u

nder it

s own

const

ructio

n of th

e Leas

e. Th

e Leas

e allo

ws fo

r unit

s

larger

than

350 ac

res if

the un

it cont

ains m

ore th

an one

well,

becaus

e unit

s are

limited

in siz

e to th

e “thr

ee hun

dred f

ifty (3

50) ar

ound

each

well.”

Leas

e, § 9.2

.

“Arou

nd” is

not a t

erm of

art, a

nd is d

efined

in its

norm

al usag

e as: “

a circ

le or in

circum

ferenc

e . . . o

n all o

r vari

ous sid

es.” M

ERRIA

M-WE

BSTE

R(11t

h ed.)

.18

Readi

ng the

plain

terms

of th

e Leas

e in th

eir or

dinary

usage

, then,

the L

ease

seems

to su

ggest t

hat th

e 350

acres

around

each

well w

ould e

xtend

outwa

rd in

an

approx

imate

circle

, or at

least g

eneral

ly in

all dir

ection

s, with

the w

ell as

the

epicen

ter an

d each

point

on th

e extr

emity

gener

ally eq

uidista

nt fro

m the

well a

t the

approx

imate

cente

r. Th

e Cour

t is co

gnizan

t that u

nits a

re not

gener

ally co

ncentr

ic

circle

s and

that an

acre

is a sq

uare u

nit of

meas

ureme

nt.19 N

everth

eless,

the w

ell

would

not b

e locat

ed dra

matica

lly at

one sid

e of th

e 350

acres

but at

the re

lative

center

with

the ac

reage

“aroun

d” the

well,

especi

ally in

light

of the

Lease

’s term

s

and th

e drill

ing tec

hnolog

y avai

lable a

t the ti

me th

e Leas

e was

signed

. The

350

acre u

nit co

ntemp

lated b

y the

Lease

is aro

und a v

ertica

l well,

not tr

avelin

g alon

g

18 In de

fining

this a

nd oth

er ter

ms th

rougho

ut the

opini

on, th

e Cour

t relies

on th

edic

tionar

y as u

pdated

to da

te, not

a dicti

onary

from

2006.

Althou

gh wh

en con

struing

terms

it is

genera

lly ap

propri

ate to

invok

e their

conte

mpora

ry me

aning

to the

exten

t poss

ible, t

he Co

urt is

confid

ent th

at the

meani

ngs of

funda

menta

l prop

ositio

ns and

adjec

tives

in the

Engli

sh lan

guage

have n

ot cha

nged a

s dram

atically

since

2006 a

s, for

examp

le, dri

lling t

echnol

ogy ha

s.

19 Acre

is defi

ned as

: “a un

it in t

he Un

ited St

ates a

nd En

gland

equal t

o 43,5

60 squ

arefee

t.” M

ERRIA

M-WE

BSTE

R.

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the we

llbore

of a h

orizon

tal we

ll made

possi

ble by

drilli

ng tec

hnolog

y utili

zed af

ter

the Le

ase wa

s exec

uted.

See, e.

g., Pls

.’ Br. S

upp., E

x. H, D

ep. Ca

rl Stein

le, at

73–74

[herei

nafter

Dep. C

arl St

einle]

.

There

fore, t

o cont

ain a u

nit as

large

as 1,0

50 acr

es as

Range

argue

s that t

he

Lease

allow

s, the

three

wells

of tha

t unit

must

be ge

nerally

space

d out

such t

hat th

e

well s

ites ar

e locat

ed nea

r the g

eneral

cente

r of th

e 350

acre a

reas a

round

each

well,

with m

inima

l over

lap wi

th ano

ther w

ell’s s

urroun

ding a

creage

and i

n a

fashio

n that

harm

onizes

the o

ther p

rovisio

ns of

the Le

ase as

well a

s poss

ible.

To

form

the 39

5 acre

unit R

ange c

onstru

cted, i

t appea

rs from

the la

nguage

of th

e

Lease

that t

he we

lls mu

st be s

paced

in suc

h a wa

y that

the 3

50 acr

es aro

und ea

ch

well a

s the e

picent

er ext

ends o

utward

to in

clude

the ex

tra 45

acres

of th

e large

r

unit.

Range

has n

ot dem

onstra

ted th

at the

three

wells

locate

d on t

he sam

e well

pad

site, w

ithin

severa

l doze

n feet

of ea

ch oth

er, co

mport

with

this c

onstru

ction.

Range

furth

er arg

ues th

at this

inter

pretati

on of

the Le

ase fru

strates

both

the

intere

sts in

mini

mizin

g surf

ace di

srupti

on and

devel

oping

the re

source

s most

econom

ically

, becau

se it r

equire

s the c

onstru

ction o

f mult

iple w

ell site

s spac

ed in

such a

way t

o achi

eve th

e desi

red un

it size

. This

spaci

ng is n

ot nec

essary

in lig

ht

of cur

rent h

orizon

tal dri

lling t

echnol

ogy, w

hich a

llows

Range

to dr

ill thr

ee we

lls

from

the sa

me we

ll site.

Cons

equent

ly, Ra

nge ar

gues th

is cons

tructio

n does

not

26

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make

the m

ost ec

onomi

c sens

e in th

e cont

ext of

horiz

ontal d

rilling

.

This m

ay be

true to

day, bu

t it wa

s not

true a

t the ti

me th

e Part

ies sig

ned th

e

Lease

. The

horizo

ntal d

rilling

techno

logy n

ow re

adily

in use

was n

ot the

n

availab

le in P

ennsyl

vania,

and no

t pres

umabl

y cont

empla

ted by

the p

arties

. The

Court

is bou

nd to

constru

e the L

ease a

t the ti

me of

signin

g, and,

conse

quentl

y in

the co

ntext

of the

n-avai

lable d

rilling

techno

logy.

See Ca

vanaug

h, 446

A.2d a

t

1283.

Gener

al term

s of a

contr

act m

ay em

brace

later te

chnolo

gies, b

ut the

terms

thems

elves

are sti

ll appl

ied ac

cordin

g to t

heir o

rdinar

y mean

ing at

the tim

e they

were

used.

See id

.

Carl S

teinle,

Land

Manag

er for

Range

, state

d at h

is depo

sition

that th

e Leas

e

“was

made

for ve

rtical w

ellbore

s. Th

ere we

re no

horizo

ntal w

ellbore

s that I

know

of in

the St

ate of

Penns

ylvani

a at th

e time

the le

ase wa

s exec

uted.”

Dep.

Carl

Steinl

e, at 5

2–53.

Conse

quentl

y, the

Court

’s cons

tructio

n lead

s to an

ordin

ary an

d

approp

riate,

rather

than

absurd

resul

t, when

consi

dering

the L

ease “

with d

ue reg

ard

to the

know

n char

acteri

stics o

f the b

usines

s to wh

ich it

relate

s” at t

he tim

e of

signin

g. Fra

nklin

Sugar

Ref. C

o. v. H

owell

, 274 P

a. 190,

194, 1

18 A.

109, 11

0

(1922)

; Cava

naugh,

446 A

.2d at

1238;

see als

o Unit

ed Sta

tes v.

Rabin

owitz,

339

U.S. 56

, 70 (1

950) (F

rankfu

rter, J

., diss

enting

) (“Wo

rds m

ust be

read

with t

he

gloss

of the

exper

ience

of tho

se wh

o fram

ed the

m.”).

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Finally

, Rang

e argu

es tha

t findi

ng it e

xceede

d its u

nitiza

tion a

uthori

ty und

er

the Le

ase is

agains

t the N

euhard

s’ inte

rest b

ecause

Range

would

not u

se all

of the

Neuha

rds’ 4

7 acre

s in a n

ewly

design

ated u

nit ba

sed on

the 3

50 acr

e cap.

This

may b

e true,

but th

e argu

ment

is unpe

rsuasi

ve for

sever

al reas

ons. F

irst, th

e

Neuha

rds br

ought

this a

ction a

nd are

presu

mably

aware

of po

ssible

conseq

uences

—it is

not fo

r Rang

e or th

e Cour

t to de

cide th

e wisd

om or

prude

nce

of the

Neuha

rds’ d

ecisio

ns in

pursui

ng the

ir futu

re eco

nomic i

nteres

ts. Se

cond,

Range

prese

nted t

wo alt

ernate

unit c

onfigu

ration

s that d

o not

utilize

all 47

acres

,

but th

at does

not m

ean th

ere ar

e not

possib

le conf

igurat

ions th

at are

both

econom

ically

benef

icial an

d do u

tilize

all 47

acres;

Range

has li

ttle in

centiv

e to

demons

trate t

hose c

onfigu

ration

s now

. Thir

d, in

light

of the

fact t

hat th

is Leas

e

expire

d and

that R

ange h

as uti

lized d

rilling

techno

logy n

ot con

templa

ted by

its

terms

, it wo

uld se

em ap

propri

ate fo

r the P

arties

to ne

gotiate

a new

Lease

with

terms

amena

ble to

curre

nt cir

cumsta

nces a

nd wit

hout th

e 350

acre c

ap, if

this is

the

course

they

wish t

o take

.

The C

ourt is

cogni

zant o

f the r

amific

ations

of enf

orcing

the L

ease’s

terms

.

This i

s not

an aca

demic e

xercis

e of h

yper-te

chnica

l trivi

alities

, but ra

ther a

decisio

n with

emine

nt pra

ctical e

ffect.

Range

has in

vested

subst

antial

sums o

f

money

into

the pr

oject a

nd thi

s deci

sion d

oes ha

ve eco

nomic r

amific

ations.

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Those

rami

ficatio

ns, ho

wever

, exten

d beyo

nd the

imme

diate r

elatio

nship

betwe

en the

partie

s. “T

he mo

st imp

ortant

funct

ion of

contr

act law

is to

provid

e a

legal r

emedy

for b

reach

in ord

er to

enhanc

e the u

tility

of con

tractin

g as a

meth

od

of org

anizin

g econ

omic a

ctivity

. . . .”

Rich

ard A.

Posne

r, The

Law a

nd Ec

onom

ics

of Co

ntract

Inter

pretat

ion, 83

TEX.

L.RE

V. 158

1, 1582

(2005

) [here

inafte

r

Posne

r]. Th

is func

tion m

ay be

indepe

ndent

of int

erpret

ing co

ntract

terms

, but it

is

also r

ealize

d when

court

s enfo

rce co

ntract

s as w

ritten

and, co

nseque

ntly, p

rovide

a

stable

and p

redicta

ble co

ntract

ing en

vironm

ent fo

r that e

conom

ic activ

ity to

flouri

sh.20 Enfor

cing c

ontrac

ts as w

ritten

may a

lso en

courag

e bette

r draf

tsmans

hip in

the fir

st inst

ance.

When

it is c

lear th

at cont

racts w

ill be

enforc

ed acc

ording

to th

eir

terms

, partie

s know

they

cannot

write

ambig

uities

into

agreem

ents s

o that

they

can

act as

they

wish w

ithout

regar

d to t

he ter

ms of

the b

argain

and “

idly a

ssume

that

judges

will s

ave th

em fro

m the

ir blun

ders.”

ANT

ONIN

SCAL

IA&B

RYAN

A.

20 The C

ourt is

aware

that s

hiftin

g the

costs o

f writi

ng cle

ar and

more

thoro

ughly

prospe

ctive c

ontrac

ts to t

he par

ties on

the f

ront en

d, rath

er tha

n expe

nding

those

costs o

nliti

gation

to re

solve

disput

es aft

er the

y occu

r may,

in so

me in

stance

s, resu

lt in a

more

costly

and

less e

fficien

t outc

ome.

See, e.

g., Ric

hard A

. Posn

er, Th

e Law

and E

conom

ics of

Contr

actInt

erpret

ation

, 83 T E

X.L.

REV.

1581, 1

583–84

, 1608–

14 (20

05) (a

rticula

ting t

he var

iables

that

impos

e cost

s in th

e proc

ess of

draft

ing, li

tigatin

g, and

interp

reting

contr

acts, a

nd dem

onstra

ting

the va

rious

impli

cation

s of sh

ifting

this c

ost bu

rden).

Neve

rthele

ss, th

e Cour

t is pe

rsuade

d that

the be

nefit o

f sound

contr

act law

and a

clear

rule u

nder w

hich p

arties

may

bargai

n faci

litates

stable

found

ations

for a f

ountain

head o

f econ

omic a

ctivity

.

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GARN

ER,R

EADI

NGLA

W:TH

EINT

ERPR

ETAT

ION O

F LEG

ALTE

XTS x

xviii (

2012).

21

Even

when

contra

cts ar

e enfo

rced a

s writt

en, ho

wever

, partie

s may

still

choose

to re

ly on

ambig

uous fo

rm co

ntract

s and

chance

the h

azards

of lit

igatio

n.

That i

s an e

conom

ic deci

sion t

hat de

pends

on the

partic

ulars o

f each

situat

ion. S

ee,

e.g., P

osner,

at 158

3–84, 1

608–14

. Rega

rdless

of an

indiv

idual’

s choi

ce on

that

matter

, howe

ver, w

hen co

urts e

nforce

contr

acts a

ccordi

ng to

their t

erms p

arties

can

genera

lly pr

edict a

court

’s deci

sion b

ased o

n clea

r text

in the

event

of lit

igatio

n.

This p

rovide

s a m

easure

of sta

bility

for o

ne var

iable i

n the

calcul

us of

the pa

rties’

econom

ic deci

sion-m

aking.

See

id.

In thi

s case

, inste

ad of

procee

ding w

ith a q

uestio

nable p

lan in

light

of the

Lease

’s lang

uage a

nd cha

nged t

echnol

ogy, R

ange c

ould h

ave re

negoti

ated t

he

langua

ge and

enter

ed a n

ew ag

reeme

nt. T

ransac

tion c

osts a

side, n

othing

preve

nted

this c

ourse

of act

ion. F

urther

more,

nothi

ng pre

vents t

he Par

ties fro

m ren

egotiat

ing

in the

wake

of thi

s deci

sion.

This C

ourt w

ill not

refus

e to en

force

a clea

r and

unamb

iguous

contr

act an

d

will n

ot nul

lify its

terms

simply

becau

se a p

arty d

isregar

ded th

e agre

ement

or

formu

lated a

strain

ed con

trivanc

e of it

s term

s and

made

a busi

ness d

ecisio

n to

21 See a

lso Fe

lix Fr

ankfur

ter, A

Symp

osium

on St

atutor

y Con

struct

ion: F

orewa

rd, 3

V AND

.L.R

EV. 36

5, 368

(1950)

(“Jud

icial ex

pansio

n of m

eaning

beyon

d the

limits

indica

ted is

repreh

ensibl

e beca

use it

encour

ages s

lipsho

dness

in dra

ftsmans

hip an

d irre

sponsi

bility

inleg

islatio

n. It a

lso en

lists to

o heav

ily th

e priv

ate so

cial an

d econ

omic v

iews o

f judge

s.”)

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procee

d with

subst

antial

invest

ment.

See

Dep. C

arl St

einle,

at 67–6

8. Th

e Leas

e

was d

rafted

with

expres

sed lim

itation

s that f

rustra

te Rang

e’s ab

ility t

o utili

ze

moder

n hori

zontal

drillin

g tech

niques

. Whil

e this m

ay be

true, i

t does

not ch

ange

the lan

guage

of the

Lease

. Rang

e’s pr

oper re

medy

for th

is prob

lem wa

s to

negoti

ate a n

ew lea

se tha

t allow

ed Ra

nge to

devel

op the

prope

rty in

the m

anner

desire

d. En

forcin

g cont

racts a

s writt

en pro

vides

a clea

r found

ation u

pon wh

ich

parties

can c

onduct

this b

argain

ing ef

ficien

tly an

d care

fully,

and r

est as

sured

their

terms

will b

e hono

red.

4.Dr

illing

Adjac

ent to

Prem

ises D

id No

t Exte

nd Le

ase

In a f

inal at

tempt

to sav

e the L

ease, R

ange a

rgues

that it

s activ

ities o

n the

Null P

ropert

y prio

r to th

e expi

ration

of th

e Leas

e’s pr

imary

term

constit

ute dr

illing

operat

ions s

ufficie

nt to

preser

ve the

Lease

, becau

se the

drilli

ng res

ulting

from

those

initial

opera

tions

would

event

ually

pass o

n or u

nder th

e Neuh

ards’ p

ropert

y.

This a

rgume

nt is a

lso un

availin

g.

The L

ease u

nambig

uously

requi

res Le

ssee to

“com

mence

a well

on th

e

Lease

d Prem

ises o

r on a

spaci

ng uni

t conta

ining

a port

ion of

the L

eased

Premi

ses.”

Lease

, § 8.1

(emp

hasis a

dded).

Alth

ough R

ange u

ndoubt

edly c

omme

nced a

well

prior

to the

expir

ation o

f the p

rimary

term,

it did

not d

o so o

n22the

Lease

d

22 The w

ord “o

n” is n

ot a te

rm of

art, a

nd is d

efined

in its

norm

al usag

e as a

prepo

sition

meani

ng, in

ter al

ia: “a

funct

ion wo

rd to

indica

te posi

tion o

ver an

d in c

ontact

with

that w

hich

31

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premi

ses, bu

t on a

prem

ises a

djacen

t23 to th

e Leas

ed Pre

mises

that w

as not

unitiz

ed

accord

ing to

the L

ease.

Under

a plain

readi

ng of

the Le

ase, R

ange’s

activ

ities o

n

the Nu

ll Prop

erty a

djacen

t to th

e Leas

ed Pre

mises

do no

t const

itute d

rilling

activi

ties “o

n the

Lease

d Prem

ises.”

Nor

was th

ere a s

ufficie

nt mo

dicum

of

activi

ty in

prepar

ation f

or dri

lling o

n the

Lease

d Prem

ises d

uring

the pr

imary

term

in ord

er to

extend

the L

ease—

the op

erativ

e activ

ity wa

s perf

ormed

on th

e Null

Proper

ty. M

ere pe

rmitti

ng and

traver

sing w

ithout

more

is ins

ufficie

nt, pa

rticula

rly

under

the lan

guage

of thi

s Leas

e. See

, e.g.,

Berna

rdi, 5

Pa. D.

& C.

3d at 9

2–96;

SUMM

ERSO

IL AN

D GAS

§ 15:1

0 (list

ing ph

ysical

activ

ities a

s the p

rimary

opera

tive

acts o

f com

menci

ng dri

lling o

peratio

ns).

In adv

ancing

its ar

gument

, Rang

e relie

s on t

wo no

n-bind

ing ca

ses th

at are

readil

y disti

nguish

able f

rom th

e curr

ent sc

enario

. In A

& M

Oil, I

nc. v.

Miller

, 11

Kan. A

pp. 2d

152, 1

54–55,

715 P.

2d 129

5, 129

6–97 (

1986),

a Kans

as cou

rt foun

d

that th

e clea

r “lan

guage

of the

drilli

ng ope

ration

s clau

se” an

d the

defend

ant’s

activi

ty dur

ing th

e prim

ary ter

m tha

t comm

enced

operat

ions to

drill

a well

on a

neighb

oring

proper

ty tha

t woul

d even

tually

pass

under

the lea

sed pr

emise

s were

suppor

ts from

benea

th . . .

used

as a f

unctio

n word

to in

dicate

a pres

ence w

ithin.

” MER

RIAM-

W EBS

TER. 23 “A

djacen

t” is a

n adje

ctive d

efined

as, in

ter al

ia: “h

aving

a com

mon b

order:

abutt

ing,

touchi

ng.” M

ERRIA

M-WE

BSTE

R.

32

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7

suffic

ient to

exten

d the

lease.

The

drillin

g oper

ations

clause

at iss

ue in

that ca

se

provid

ed: [I]t is

expres

sly ag

reed t

hat if

lessee

shall

comme

nce op

eratio

ns for

drillin

g at an

y tim

e whil

e this l

ease is

in fo

rce, th

is leas

e shal

l rema

inin

force

and its

terms

shall

contin

ue so

long a

s such

opera

tions

arepro

secute

d and,

if pro

ductio

n resu

lts the

refrom

, then

as lon

g as

produc

tion c

ontinu

es.

A & M

Oil, I

nc. v.

Miller

, 11 Ka

n. App.

2d 15

2, 152,

715 P

.2d 12

95, 12

96 (19

86).

The b

road l

anguag

e of th

e drill

ing op

eratio

ns cla

use at

issue

in Mi

ller is

distin

ctly di

fferen

t from

the c

lause

at issu

e in th

e case

befor

e the C

ourt.

In Mi

ller

the op

eratio

ns cla

use co

ntaine

d no t

empor

al or g

eograp

hic lan

guage

qualify

ing th

e

phrase

“lesse

e shal

l comm

ence o

peratio

ns for

drilli

ng at a

ny tim

e.” M

iller, 7

15

P.2d a

t 1296

. Acco

rdingl

y, the

court f

ound t

hat th

ere wa

s no r

equire

ment

that

those

operat

ions ta

ke pla

ce on

the pl

aintiff

’s leas

ed pre

mises

.

In the

case

sub ju

dice, b

y cont

rast, t

he dri

lling o

peratio

ns cla

use is

explici

t

that “L

essee

shall c

omme

nce a w

ell on

the Le

ased P

remise

s.” L

ease, §

8.1. T

he

langua

ge qua

lifying

the lo

cation

of Le

ssee’s

activ

ities re

nders t

he Le

ase at

issue

suffic

iently

distin

ct from

the le

ase in

Mille

r such

that th

e outc

ome o

f that c

ase is

not pe

rsuasi

ve on

this C

ourt’s

ultim

ate ho

lding.

The

court’s

decis

ion in

Mille

r is

persua

sive, h

oweve

r, in r

einfor

cing t

he bla

ck lett

er law

that w

hen th

e unam

biguou

s

33

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langua

ge is c

lear, a

n agre

ement

’s term

s shou

ld be

enforc

ed acc

ording

ly.24 Id

. at

1296–9

7. In Ma

nzano

Oil Co

rp. v.

Chesa

peake

Opera

ting, I

nc., 17

8 F. S

upp. 2d

1217,

1220 (

D.N.M

. 2001)

, whic

h Rang

e also

cites

for su

pport,

a Unit

ed Sta

tes

Magis

trate J

udge in

the U

nited

States

Distr

ict Co

urt fo

r the D

istrict

of Ne

w Mexi

co

held t

hat, un

der Ne

w Mexi

co law

, the d

efenda

nt wh

o bega

n drill

ing on

a thre

e acre

proper

ty adj

acent

to the

leased

prope

rty du

ring t

he pri

mary

term

extend

ed the

lease

on the

prope

rty at

issue.

In th

at case

, the d

efenda

nt cou

ld not

drill

on the

leased

proper

ty wit

hout fi

rst obt

aining

a spec

ial zon

ing pe

rmit o

r vari

ance th

at was

diffic

ult to

acqui

re, so

the d

efenda

nt pur

chased

the a

djacen

t three

acre

proper

ty on

which

drilli

ng wa

s allo

wed a

nd com

mence

d a we

ll. M

anzano

Oil C

orp. v.

24 Furth

er app

lying

this p

rincip

le of la

w, ano

ther c

onside

ration

in co

nstrui

ng thi

s Leas

e iswh

ether

drillin

g und

er the

Lease

d Prem

ises w

ould e

ven sa

tisfy t

he dri

lling o

peratio

ns cla

use as

writte

n. In

the Le

ase, th

e drill

ing op

eratio

ns cla

use on

ly con

templa

tes dr

illing

“on th

e Leas

edPre

mises

or on

a spac

ing un

it cont

aining

a port

ion of

the L

eased

Premi

ses.”

Lease

, § 8.1

. Els

ewher

e in th

e Leas

e, how

ever, t

he dra

fter d

istingu

ished

betwe

en the

“Less

or’s o

il, gas

and

coalbe

d meth

ane ga

s right

s cont

ained

in,on

, and u

nder

the Le

ased P

remise

for th

e purp

ose of

. . .

drillin

g, oper

ating, p

roduci

ng and

remo

ving o

il, gas

, coalb

ed me

thane

gas, an

d liqu

idhyd

rocarb

ons th

ere fro

m.” L

ease, I

ntrodu

ction.

The L

ease d

rafter

recog

nized

a disti

nction

betwe

en the

prepo

sitions

in, on

, and u

nder,

and on

ly use

d “on”

in th

e drill

ing op

eratio

ns cla

use. T

he doc

trine o

f expr

essio

unius

est ex

clusio

alteri

us ins

tructs

that w

hen ce

rtain

words

are u

sed in

a cont

ract an

d othe

r word

s omi

tted, it

impli

es the

inten

tional

exclu

sion o

f the o

mitted

terms

. See,

e.g., L

inan-F

aye Co

nst. C

o., Inc

. v.Ho

us. Au

th. of

City

of Ca

mden,

49 F.

3d 915

, 936 (

3d Cir

. 1995)

; BLA

CK’SL

AWDIC

TIONA

RY(9t

h ed. 2

009).

Apply

ing th

is prin

ciple h

ere, dr

illing

“under

” the L

eased

Premi

ses wo

uld no

tnec

essari

ly sat

isfy th

e drill

ing op

eratio

ns cla

use th

at used

only

“on,” w

hen bo

th wo

rds we

re use

dtog

ether

earlier

in th

e docu

ment.

This

const

ructio

n also

make

s sens

e in th

e cont

ext of

drilli

ngtec

hnolog

y avai

lable a

t the ti

me th

e Leas

e was

signed

. See

Dep. C

arl St

einle,

at 70–7

2.

34

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Chesa

peake

Opera

ting, I

nc., 17

8 F. S

upp. 2d

1217,

1218–

19 (D

.N.M.

2001)

. The

defend

ant’s d

rilling

plan

would

event

ually

cross

onto t

he sub

terran

ean po

rtion o

f

the lea

sed pr

operty

, but n

ot unt

il afte

r the e

xpirat

ion of

the p

rimary

term.

Id.

Relyi

ng on

the br

oad lan

guage

of the

lease’

s pool

ing cla

use, th

e cour

t wrot

e: “I

find t

hat ad

jacent

prope

rty an

d the

Lease

prope

rty we

re ‘po

oled’

or ‘co

mbine

d’ in

such a

way a

s to” e

xtend

the lea

se by

the co

mmenc

ement

of dr

illing.

25 Id. at

1220.

The d

ecisio

n in M

anzano

Oil C

orp. is

also d

istingu

ishabl

e from

the c

ase

before

the C

ourt, b

ecause

the c

ourt in

Manz

ano ba

sed its

holdi

ng on

the cr

itical

fact th

at the

adjace

nt lan

d and

leased

land w

ere po

oled v

alidly

by the

autho

rity

grante

d unde

r the le

ase, re

gardle

ss of

the pl

anned

eventu

al drill

ing be

neath

the

leased

prem

ises.

See id

. The

drillin

g unde

r the le

ased p

ropert

y afte

r the p

rimary

term

expire

d did

not im

pact th

e cour

t’s hol

ding, a

nd, co

nseque

ntly, t

he cas

e does

not su

pport R

ange’s

positi

on. S

ee id.

25 The c

ourt d

escrib

ed the

lease’

s pool

ing cla

use, w

riting:

Paragr

aph fiv

e of th

e Leas

e prov

ides, i

n pert

inent

part, t

hat De

fendan

t, the

lessee

,is “

grante

d the

right

. . . to

pool

or com

bine th

is leas

e, the

land c

overed

by it

orany

part o

r hori

zon th

ereof

with a

ny oth

er lan

d, leas

es, m

ineral

estate

s or p

arts

thereo

f for th

e prod

uction

of oi

l or g

as.” P

aragra

ph fiv

e also

conta

ins th

efol

lowing

langua

ge, to

wit:

Drilli

ng ope

ration

s on o

r prod

uction

from

any pa

rt of a

ny suc

h unit

shall

becon

sidere

dfor

all pu

rposes

, excep

t the p

ayment

of ro

yalty,

as op

eratio

nscon

ducted

upon

or pro

ductio

n from

the la

nd des

cribed

in th

is leas

e.

Manza

no Oil

Corp.

, 178 F

. Supp

. 2d at

1219.

35

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Accor

dingly

, the c

lear a

nd una

mbigu

ous lan

guage

of the

Lease

contr

ols.

Steuar

t, 444

A.2d a

t 661.

Rang

e did

not “c

omme

nce a w

ell on

the Le

ased

Premi

ses or

on a s

pacing

unit c

ontain

ing a p

ortion

of th

e Leas

ed Pre

mises

,” befo

re

the ex

piratio

n of th

e prim

ary ter

m. A

s a co

nseque

nce, th

e Leas

e expi

red by

its ow

n

terms

.

III.

CONC

LUSIO

N

In sum

, Rang

e com

mence

d a we

ll befo

re the

expir

ation o

f the L

ease’s

prima

ry ter

m. T

hat we

ll, how

ever, w

as nei

ther “

on the

Lease

d Prem

ises”

nor “o

n a

unit co

ntaini

ng a p

ortion

of th

e Leas

ed Pre

mises

.” Ra

nge ex

ceeded

its un

itizatio

n

author

ity un

der th

e plain

and u

nambig

uous la

nguage

in th

e Leas

e and

did no

t

comme

nce a w

ell on

the Ne

uhards

’ prop

erty.

Conse

quentl

y, the

Lease

expir

ed by

its ow

n term

s on J

une 21

, 2011.

The N

euhard

s’ Moti

on for

Summ

ary Ju

dgment

is gra

nted.

Range

’s Moti

on

for Su

mmary

Judgm

ent is

denied

.

An ap

propri

ate Or

der fo

llows

.

BY TH

E COU

RT:

s/ Matth

ew W

. Bran

nMa

tthew

W. B

rann

United

State

s Distr

ict Jud

ge

36

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7

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37

Case

4:1

1-cv

-019

89-M

WB

Doc

umen

t 40

File

d 04

/30/

14

Page

37

of 3

7

IN TH

E UNI

TED S

TATE

S DIST

RICT C

OURT

FOR T

HE M

IDDL

E DIST

RICT O

F PEN

NSYL

VANI

A

THOM

AS A.

NEUH

ARD a

nd:

Case

No. 4:

11-cv-

01989

BARB

ARA S

. NEU

HARD

,: :

Plaint

iffs,

: :v.

:(Ju

dge Br

ann)

:RA

NGE R

ESOU

RCES

–:

APPA

LACH

IA, L

LC,

: :De

fendan

t.: OR

DER

April

30, 20

14

AND N

OW, in

accor

dance

with t

he Me

moran

dum of

this s

ame d

ate, IT

ISHE

REBY

ORD

ERED

THAT

:

1.De

fendan

t Rang

e Reso

urces–

Appal

achia,

LLC’s

Moti

on for

Summ

aryJud

gment

is DE

NIED

(ECF

No. 25

).

2.Pla

intiff

Thom

as A.

Neuha

rd and

Barba

ra S.

Neuha

rd’s M

otion

forSu

mmary

Judgm

ent is

GRAN

TED (

ECF N

o. 22).

3.Th

e Oil a

nd Ga

s Leas

e of Ju

ne 21,

2006

entere

d into

by th

e Part

iesexp

ired b

y its o

wn ter

ms on

June

21, 20

11.

4.Th

e cler

k is d

irecte

d to e

nter ju

dgment

in fa

vor of

the P

laintiff

s and

close

the ca

se file

.

BY TH

E COU

RT:

s/ Matth

ew W

. Bran

nMa

tthew

W. B

rann

United

State

s Distr

ict Jud

ge

Case

4:11

-cv-01

989-M

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Doc

umen

t 41

Filed

04/30

/14 P

age 1

of 1

UNIT

ED ST

ATES

DIST

RICT

COUR

T

FOR T

HE M

IDDL

E DIST

RICT

OF PE

NNSY

LVAN

IA

Thom

as A.

Neuha

rd and

:Ba

rbara

S. Ne

uhard

: :Pla

intiffs

: Civi

l Actio

n No. 4

:11-CV

-1989

:vs.

: :Ra

nge Re

source

s-Appa

lachia

, LLC

: :De

fendan

t.:

JUDG

MENT

IN A

CIVI

L ACT

ION

The C

ourt h

as ord

ered t

hat (c

heck o

ne):

___the

plain

tiff___

______

______

______

______

______

______

______

__ rec

over fr

om th

edef

endant

_____

______

______

______

______

______

______

______

______

the a

mount

of$__

______

______

______

______

______

____do

llars ($

), whic

h incl

udes p

rejudg

ment

intere

st at th

e rate

of __

______

__perc

ent, pl

us pos

t judgm

ent in

terest

at the

rate o

f ____

_____

per an

num, al

ong wi

th cos

ts.

___ th

e plain

tiffrec

over n

othing

, the a

ction b

e dism

issed

on the

meri

ts, and

the d

efenda

nt___

______

______

______

______

______

____ r

ecover

y cost

s from

the p

laintiff

______

______

______

______

______

______

_.

X OT

HER:

Judgm

ent is

hereby

enter

ed in

favor

of the

Plain

tiffs p

ursuan

t to M

emora

ndum

andOr

der, bo

th dat

ed and

enter

ed on

the do

cket o

n Apri

l 30, 2

014.

Dated

: Apri

l 30, 2

014Ga

ry L.

Hollin

ger, A

cting C

lerk o

f Cour

tBy

: s/Lis

a A. G

onsalv

es, de

puty

Case

4:11

-cv-01

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umen

t 42

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/14 P

age 1

of 1

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IN TH

E UN

ITED

STAT

ES C

OURT

OF A

PPEA

LSFO

R TH

E FI

FTH

CIRC

UIT

No. 1

3-404

58

CHES

APEA

KE LO

UISI

ANA,

L.P.,

Plaint

iff -A

ppell

eev. BU

FFCO

PROD

UCTI

ON, IN

C.; TW

IN RE

SOUR

CES,

LLC;

WAYN

E E.

FREE

MAN;

FREE

MAN

CAPI

TAL,

LTD.

; FRE

EMAN

RESO

URCE

S, LT

D.;

FRM

GP, L

LC,

Defen

dants

-App

ellan

ts

FRAN

K M.

BUFK

IN II

I,

Interv

enor

Defen

dant

-App

ellan

tv. HA

RLET

ON O

IL &

GAS

, INCO

RPOR

ATED

,

Interv

enor

-App

ellan

t -Ap

pelle

e

Appe

alsfro

m the

Unit

ed St

ates D

istric

t Cou

rtfor

the E

astern

Dist

rict o

f Tex

as US

DC N

o. 2:1

0-CV-

359

Befor

eHIG

GINB

OTHA

M, D

AVIS

, and

HAY

NES,

Circu

it Jud

ges.

PER C

URIA

M:*

* Pursu

ant t

o 5TH

CIR.

R. 47

.5, th

e cou

rt ha

s dete

rmine

d tha

t this

opini

on sh

ould

not

be pu

blish

ed an

d is n

ot pre

ceden

t exce

pt un

der t

he lim

ited c

ircum

stanc

es set

forth

in 5T

H CI

R. R.

47.5.

4.

Unite

d Sta

tes C

ourt

of Ap

peals

Fifth

Circ

uit

FILE

DMa

y 7, 2

014

Lyle

W. C

ayce

Cler

k

C

ase:

13-4

0458

D

ocum

ent: 0

0512

6215

58

Pag

e: 1

Date

File

d: 05

/07/20

14

No.1

3-404

58

Asser

ting

divers

ity

jurisd

iction

, Ch

esape

ake

Louis

iana,

L.P.

(“Che

sapea

ke”) b

rough

t sev

eral s

tate-l

aw cl

aims a

gains

t (1) F

reema

n Cap

ital,

Ltd.

(“Free

man C

apita

l”);(2

)Buff

coPr

oduc

tion,

Inc. a

nd Tw

in Re

source

s, LLC

(colle

ctive

ly, “B

uffco”

);and

(3) W

ayne

E. F

reema

n, Fr

eeman

Reso

urces

, Ltd.

,

and

FRM

GP, L

LC (c

ollect

ively,

“Free

man”)

seek

ing to

recov

er its

alle

ged

overp

ayme

nt for

an as

signm

ent o

f the d

eep rig

hts in

the G

eisler

Unit

prop

erty.

Buffc

o, Fr

eeman

, an

d Fr

eeman

Cap

ital

counte

rclaim

ed,

alleg

ing t

hat

Chesa

peak

e was

requir

ed to

pur

chase

their

inter

ests i

n va

rious

prop

erties

referr

ed to

asthe

Bow

en, H

emby

, and

Yow

Unit

s.Ha

rleton

Oil &

Gas,

Inc.

(“Harl

eton”)

, the

hold

er of

50%

of the

deep

righ

ts in

the G

eisler

Unit

,

interv

ened

and a

sserte

dvari

ous c

laims

again

st Ch

esape

ake,

Freem

an, a

nd

Buffc

o. The d

istric

t cou

rt gra

nted s

umma

ry jud

gmen

t in f

avor

of Ch

esape

ake

and

Harle

tonwi

th res

pect

to the

Geis

ler U

nit c

laims

and

in fav

or of

Chesa

peak

e with

resp

ect to

the c

laims

concer

ning t

he Bo

wen,

Hemb

y, an

d Yow

Units

. How

ever,

becau

se Ha

rleton

’s prop

er ali

gnme

nt as

a plai

ntiff-i

nterve

nor

destr

oyss

ubjec

t-matt

erjur

isdict

ion, w

e VAC

ATE t

he di

strict

cour

t’s su

mmary

judgm

ent d

ecisio

n with

resp

ect to

the G

eisler

Unit

claim

sand

REM

AND

the

matte

r for

a dete

rmina

tion o

f whe

ther H

arleto

n is a

n ind

ispen

sable

party

. We

AFFI

RM th

e cou

rt’s d

ecisio

n wi

th res

pect

to the

Bow

en, H

emby

, and

Yow

Units

, as t

o whic

h an i

ndep

ende

nt gro

und f

or jur

isdict

ion ex

ists.

I. Fa

ctual

and P

roced

ural

Back

groun

d

Chesa

peak

e sue

d Free

man a

nd Bu

ffco,1 e

ssenti

ally s

eeking

to re

cover

an

overp

ayme

nt it

had

made

to th

em.

This

alleg

ed ov

erpay

ment

involv

ed a

trans

action

that

arose

out o

f a Ju

ly 31

, 200

8 Lett

er Ag

reeme

nt (th

e “Le

tter

1 Chesa

peak

e also

sued

Freem

an Ca

pital

but s

ubseq

uentl

y aba

ndon

ed its

claim

after

dis

coveri

ng th

at Fr

eeman

Cap

ital h

ad n

ot rec

eived

any p

ortion

of th

e $13

.6 mi

llion t

hat

Chesa

peak

e had

paid

for th

e Geis

ler U

nit.

2

C

ase:

13-4

0458

D

ocum

ent: 0

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14

No.1

3-404

58

Agree

ment”

) ente

red in

to be

tween

Che

sapea

ke a

nd B

uffco.

Th

e Le

tter

Agree

ment

provid

ed th

at Ch

esape

ake w

ould

pay a

pprox

imate

ly $2

32 m

illion

to acq

uire a

n assi

gnme

nt of

Buffc

o’s w

orking

inter

ests i

n the

deep

righ

ts of

severa

l oil

and g

aspro

perti

es in

Texa

s for

a peri

od of

three

years

. Th

ese

prope

rties

includ

ed, a

mong

othe

rs, th

e Geis

ler U

nit an

dthe

Bow

en, H

emby

,

and Y

ow U

nits.

The L

etter

Agree

ment

contai

neda

“Non

-Ops

Clau

se” th

rough

which

Chesa

peak

e agre

ed to

mak

e the

same

offer

(with

the s

ame t

erms)

to the

owne

rs of

the no

n-ope

rating

work

ing in

terest

s of t

hese

prope

rties.

The

non-

opera

ting w

orking

inter

estow

ners

includ

ed Fr

eeman

, Free

man C

apita

l,and

Harle

ton.

Based

on fa

ulty i

nform

ation

from

a thi

rd pa

rtyto

the ef

fectt

hat B

uffco

and F

reema

n each

owne

d 50%

inter

ests i

n the

Geis

ler U

nit, C

hesap

eake

paid

Buffc

o and

Free

man $

6.8 m

illion

in ex

chan

ge fo

r wha

t Che

sapea

ke be

lieve

d

was 1

00%

of the

deep

righ

ts be

lowthe

Geis

ler U

nit. T

he pa

rties

now

agree

that t

he pr

oper

alloca

tion

of the

work

ing in

terest

s in

the G

eisler

Unit

was

actua

lly: B

uffco

with

25%,

Freem

an w

ith 22

%, Fr

eeman

Capit

al wi

th 3%

, and

Harle

ton w

ith 50

%. A

s a re

sult,

Chesa

peak

e only

recei

ved a

47%

intere

st in

the de

ep ri

ghts

of the

Geis

ler U

nit. C

hesap

eake

and B

uffco

agree

d not

to go

forwa

rd wi

ththe

trans

action

invo

lving

theBo

wen,

Hemb

y, an

d Yow

Unit

s,

which

was

sched

uled f

or a l

ater c

losing

date.

After

Chesa

peak

e sue

d to r

ecove

r its

overp

ayme

nt,Fr

eeman

, Free

man

Capit

al, an

d Buff

cocou

ntercl

aimed

, alle

ging t

hat C

hesap

eake

brea

ched

the

Lette

r Agre

emen

t by f

ailing

to pu

rchase

the B

owen

, Hem

by, a

nd Y

ow U

nits.

Freem

an C

apita

l als

o cla

imed

tha

t Ch

esape

ake

breach

ed t

he L

etter

Agree

ment

by fa

iling t

o pur

chase

its 3%

inter

est in

the G

eisler

Unit

.

Harle

ton in

terve

ned

pursu

ant

to Fe

deral

Rule

of C

ivil P

roced

ure

24(a)

(2).

Boile

d do

wn to

its e

ssenti

als, H

arleto

n sou

ght 5

0% of

the $

13.6

millio

n Che

sapea

ke pa

id to

Buffc

o and

Free

man,

and i

n exch

ange

Harl

eton

3

C

ase:

13-4

0458

D

ocum

ent: 0

0512

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Pag

e: 3

Date

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d: 05

/07/20

14

CH

ES

AP

EA

KE

LO

UIS

IAN

Av.

BU

FFC

OP

RO

DU

CT

ION

D-1

MEALEY’S Fracking Report Vol. 1, #1 May 2014

Page 68: Mealey's Fracking-Report-sample-issue-may-2014

No.1

3-404

58

would

conv

ey it

s inte

rest i

n the

Geis

ler U

nit to

Che

sapea

ke.

Harle

ton al

so

assert

ed v

ariou

s fra

ud c

laims

aga

inst

Buffc

o ba

sed o

n Bu

ffco’s

alle

ged

misre

presen

tation

s to C

hesap

eake

conc

erning

its in

terest

s in t

he G

eisler

Unit

and t

o Harl

etonc

oncer

ning i

ts off

er to

purch

ase H

arleto

n’s in

terest

s in t

he

Geisl

er Un

it. N

o part

y asse

rted a

claim

or co

unter

claim

again

st Ha

rleton

.

Chesa

peak

e and

Buff

co set

tled,

and t

he di

strict

cour

t dism

issed

all t

he

claim

s betw

een th

em.

The d

istric

t cou

rtthe

nen

tered

summ

ary ju

dgme

nt

based

on th

e part

ies’ v

ariou

s moti

ons,

rulin

g tha

t: (1)

Free

man,

Freem

an

Capit

al,an

d Harl

eton w

ere th

ird-pa

rty be

nefic

iaries

of th

e Lett

er Ag

reeme

nt

such

that

they c

ould

enfor

ce the

“Non

-Ops

Clau

se”; (2

) Buff

co an

d Free

man

were

unjus

tly en

riche

d by

the p

ortion

of th

e $13

.6 mi

llion

paym

ent f

rom

Chesa

peak

e tha

t is a

ttribu

table

to the

53%

of th

e Geis

ler U

nit ow

ned

by

Harle

ton an

d Free

man C

apita

l and

that

a con

struc

tive t

rust

shou

ld be

impo

sed

on th

at po

rtion

of th

e fun

ds; (3

) Harl

eton a

nd Fr

eeman

Capit

al sh

ould

conve

y

their i

nteres

tsin

the Ge

isler

Unitt

o Che

sapea

keaft

er rec

eiving

the f

unds

from

Buffc

o and

Freem

an; (4

) Che

sapea

ke w

as no

t enti

tled t

o any

repa

ymen

t ofth

e

$13.6

milli

on; (5

) Free

man a

nd Fr

eeman

Capit

al’s c

laims

again

st Ch

esape

ake

concer

ning t

he B

owen

, Hem

by, a

nd Y

ow U

nits f

ailed

as a

matte

r of la

w; (6

)

Harle

ton’s f

raud c

laims

again

st Bu

ffco s

urviv

e;2 and

(7) H

arleto

n and

Freem

an

Capit

al are

enti

tled

to rec

over

pre-ju

dgme

nt int

erest

again

st Bu

ffco

and

Freem

an.

Follo

wing

the d

istric

t cou

rt’s s

umma

ry jud

gmen

t ruli

ng, F

reema

n and

Freem

an C

apita

l file

d a

Motio

n to

Dism

iss fo

r La

ck o

f Sub

ject M

atter

Juris

dictio

n, ass

erting

tha

t Ha

rleton

’s int

erven

tion

destr

oyed

dive

rsity

becau

se it i

s prop

erly a

ligne

d as a

plain

tiff a

nd its

statu

s as a

n ind

ispen

sable

2In

enter

ing fin

al jud

gmen

t, the

distr

ict co

urt s

evere

d Harl

eton's

fraud

claim

s and

mad

e the

m the

subje

ct of

a sep

arate

action

.4

C

ase:

13-4

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ent: 0

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No.1

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58

party

requ

ired t

he co

urtt

o dism

iss th

e acti

on.

The m

otion

asser

ted th

at the

distri

ct cou

rt lac

ked j

urisd

iction

over

the cla

imsr

elated

to th

e Geis

ler U

nitan

d

the Bo

wen,

Hemb

y, an

d Yow

Unit

s.

The d

istric

t cou

rt de

nied t

he m

otion

, alig

ning H

arleto

n as a

defen

dant-

interv

enor.

As a

result

, the c

ourt

conclu

ded,

federa

l juris

dictio

n exis

ted un

der

28 U

.S.C.

§ 13

32 a

nd, t

heref

ore, a

n an

alysis

of w

hethe

r su

pplem

ental

jurisd

iction

aros

e un

der

28 U

.S.C.

§ 13

67 w

as un

neces

sary.

Free

man,

Freem

an Ca

pital,

Buffc

o, an

d Harl

eton3 ti

mely

appe

aled.

II.Ge

isler

Unit C

laims

As a

cou

rt of

limite

d jur

isdict

ion, w

e mu

st fir

stsat

isfy

ourse

lves,

indep

ende

nt of

the d

istric

t cou

rt’s

deter

mina

tion,

that

subje

ct-ma

tter

jurisd

iction

exist

sove

r the

parti

es’ cl

aims r

elated

to th

e Geis

ler U

nit.

See

Kokk

onen

v. G

uard

ian L

ife In

s. Co

. of A

m., 5

11 U

.S. 37

5, 37

7 (19

94);S

ilver

Star E

nters.

, Inc.

v. M/

V Sa

rama

cca, 1

9 F.3d

1008

, 101

3 n.6

(5th C

ir. 19

94).

As pr

opon

ents

of jur

isdict

ion, C

hesap

eake

and H

arleto

n carr

y the

burde

n of

estab

lishin

g jur

isdict

ion.

SeeK

okko

nen,

511

U.S.

at 37

7. H

ere, o

nly tw

o

poten

tial

source

s of

jurisd

iction

exis

t:§

1332

(div

ersity

) an

d §

1367

(supp

lemen

tal).

As th

e part

ies co

rrectl

y ack

nowl

edge

, dive

rsity

jurisd

iction

exist

ed ov

er the

suit

prior

to Ha

rleton

’s int

erven

tion;4

howe

ver,

we m

ust

consid

er wh

ether

Harle

ton’s

interv

entio

n de

stroy

eddiv

ersity

such

that

the

distri

ct cou

rt lac

ked j

urisd

iction

over

this m

atter.

We b

egin

by d

eterm

ining

whe

ther H

arleto

n is

prope

rly a

ligne

d as

a

defen

dant-

interv

enor

(as th

e dist

rict c

ourt

conclu

ded)

or a p

lainti

ff-inte

rveno

r.

Ourg

enera

lly ac

cepted

test

for al

ignme

ntpla

ces th

e part

ies w

ith th

e sam

e

3Ha

rleton

also

asser

ted a

n alt

ernati

ve cla

im th

at we

do n

ot rea

ch d

ue to

our

jurisd

iction

al ru

ling.

4 Speci

ficall

y, Ch

esape

ake w

as a c

itizen

of Ok

lahom

a and

Freem

an, F

reema

n Cap

ital,

and B

uffco

were

citize

ns of

Texa

s and

the a

moun

t in co

ntrov

ersy e

xceed

ed $7

5,000

.5

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ase:

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58

“ultim

ate in

terest

s” in

the lit

igatio

non t

he sa

me si

de.G

riffin

v. Le

e, 621

F.3d

380,

388 (

5th Ci

r. 201

0).To

that

end,

we m

ust “l

ook be

yond

the p

leadin

gs, an

d

arran

ge th

e part

ies ac

cordin

g to t

heir

sides

in the

disp

ute”t

oens

ure t

hat t

he

parti

es ha

ve a

“collis

ion of

inter

est[s]

” ove

r the

“prin

cipal

purpo

se of

the su

it”

and t

he “p

rimary

and c

ontro

lling m

atter

in dis

pute.

” Ci

ty of

India

napo

lis v.

Chase

Nat’

lBan

k of C

ity of

N.Y.

, 314

U.S.

63, 6

9 (19

41) (c

itatio

n and

inter

nal

quota

tion m

arks o

mitte

d);see

also

Griffi

n, 62

1 F.3d

at38

8.

Here,

the p

rincip

al pu

rpose

of the

suit

andt

he pr

imary

and c

ontro

lling

matte

r in

dispu

te su

ggest

that

Harle

ton is

a p

lainti

ff. T

he d

istric

t cou

rt

conclu

ded

that H

arleto

n wa

s a d

efend

ant a

fter n

oting

that

“Harl

eton

and

Chesa

peak

e cou

ld no

t be c

lassif

ied as

shari

ng th

e sam

e inte

rest i

n the

suit

becau

se bo

th are

ope

nly c

ompe

ting

to cap

ture

the s

ame

pot o

f mon

ey.”

Howe

ver,

the co

nclus

ion th

at Ch

esape

ake

and

Harle

ton w

ere a

dvers

e in

seekin

g to r

ecove

r the

“sam

e pot

of mo

ney”

belie

sthe

fact

that b

oth pa

rties

only

wante

d to r

ecove

r mon

eyfro

m Bu

ffco a

nd F

reema

n to e

nsur

e tha

t Harl

eton

receiv

ed pa

ymen

t and

Che

sapea

ke re

ceive

d Harl

eton’s

inter

est in

the G

eisler

Unit.

Wheth

er thi

s was

done

direc

tly by

Buffc

o and

Freem

an pa

ying H

arleto

n

who w

ould

then

conve

y its

intere

st to

Chesa

peak

e or b

y refu

nding

part

of

Chesa

peak

e’s pa

ymen

t suc

h tha

t Che

sape

ake c

ould

then p

urch

ase H

arleto

n’s

intere

st in

practi

cality

did n

ot ma

tter t

o Che

sapea

ke an

d Harl

eton.

Harle

ton’s

prope

r ali

gnme

nt as

a pla

intiff-

interv

enor

is fur

ther

illustr

ated b

y the

fact

that th

e sum

mary

judgm

ent o

rder a

warde

d reli

ef to

both

Harle

ton an

d Che

sapea

ke, a

nd bo

th Ha

rleton

and C

hesap

eake

are e

ssenti

ally

align

ed on

app

eal i

n see

king a

ffirma

nce o

f the

orde

r.5Fu

rther,

Harl

eton

5 Indeed

, the d

istric

t cou

rt’sa

ward

ofsu

mmary

judg

ment

relief

again

st Fr

eeman

and

Buffc

o in f

avor

of Ha

rleton

rend

ers un

avail

ing H

arleto

n’s ar

gume

nt tha

t it sh

ould

be al

igned

as

a defe

ndan

t beca

use i

ts cla

ims a

gains

t Free

man a

nd B

uffco

are m

erely

“colla

teral

to the

pri

ncipa

l disp

ute—t

he en

forcea

bility

of th

e con

tract.

” Ha

rleton

’s cla

ims a

gains

t Free

man

and B

uffco

canno

t be m

erely

collat

eral fo

r pur

poses

of de

termi

ning j

urisd

iction

whe

n the

y 6

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affirm

ative

ly see

ks to

be al

igned

with

Che

sapea

kein

certai

n circ

umsta

nces,

such

as w

hen i

t argu

es tha

tits u

njust

enric

hmen

t clai

m is

timely

becau

seits

claim

can

rela

te ba

ck t

o the

tim

ely u

njust

enric

hmen

t cla

im f

iled

by

Chesa

peak

e. F

inally

, whil

e Harl

eton b

rough

t a cl

aim ag

ainst

Chesa

peak

e,6

Buffc

o, an

d Fr

eeman

, no p

arty h

asbro

ught

a clai

m ag

ainst

Harle

ton,a

nd

Harle

ton ha

s no p

otenti

al for

liabil

ity.

Such

a lack

of po

tentia

l for

liabil

ity

again

st a p

arty s

ugge

sts th

at the

party

shou

ld be

align

ed as

a pla

intiff.

See

16

JAME

S WM.

MOOR

E ET A

L.,MO

ORE’S

FEDE

RAL P

RACT

ICE

§106

.46 (3

d ed.

2013

)

(“The

inter

veno

r mus

t be p

otenti

ally l

iable

to the

plain

tiff o

n the

prim

ary cla

im

in ord

er to

be tr

eated

as a

defen

dant

to wh

om su

pplem

ental

juris

dictio

nmay

apply

unde

r Sect

ion 13

67(b)

. An i

nterve

ning p

lainti

ff with

in the

subse

ction

is

a part

y who

volun

tarily

choos

es to

interv

ene i

n an o

ngoin

g fed

eral a

ction

to

assert

its o

wn a

ffirma

tive c

laims

.”).

Indeed

, Harl

eton

interv

ened

to se

ek

affirm

ative

relie

f, not

to pro

tect it

s inte

rests

as a d

efend

ant.

There

fore,

based

on th

e natu

re of

Harle

ton’s c

laim,

it is

prope

r to a

lign i

t with

Chesa

peak

e as a

plaint

iff-int

erven

or.

Havin

g de

termi

ned

that

Harle

ton s

hould

hav

e be

en a

ligne

d as

a

plaint

iff-int

erven

or, w

e are

boun

d to c

onclu

de th

at the

distr

ict co

urt l

acked

are th

e prin

cipal

source

of re

lief f

orHa

rleton

und

er the

summ

ary ju

dgme

nt ord

er. S

eeInd

ianap

olis, 3

14 U

.S. at

69 (o

bservi

ng th

at in

align

ing th

e part

ies, co

urts

must

look t

o the

“re

alitie

s of th

e reco

rd” an

d “loo

k bey

ond t

he pl

eadin

gs an

d arra

nge t

he pa

rties

accord

ing to

the

ir sid

es in

the di

spute

”).6

The f

act th

at Ha

rleton

filed

a cla

im ag

ainst

Chesa

peak

e does

not m

ean t

hat t

he

parti

es’ in

terest

s were

not o

veral

l alig

nedv

is-à-v

is Fr

eeman

and B

uffco.

For

instan

ce, in

Gr

iffin,

an at

torne

yseek

ing to

recov

er fee

s for

his re

presen

tation

of a

bene

ficiar

y thr

ough

a lie

n on

the b

enefi

ciary’

s tru

st wa

s prop

erly a

ligne

d wi

th the

ben

eficia

ry as

a pla

intiff-

interv

enor

asbo

th pa

rties

sough

t reco

very f

rom th

e tru

st. S

eeGr

iffin,

621 F

.3d at

383,

388.

This

align

ment

was a

pprop

riate

despi

te the

fact

that th

e atto

rney

also s

ough

t reli

ef fro

m the

be

nefic

iary.

See i

d.;see

also

Dev.

Fin. C

orp. v

. Alph

a Hou

s. & H

ealth

Care,

Inc.,

54 F.

3d 15

6, 15

9-60 (

3d C

ir. 19

95) (

altho

ugh t

he in

terest

s of t

he or

igina

lplai

ntiff

and i

nterve

nor w

ere

“nomi

nally

” in co

nflict

, the i

nterve

nor w

as sti

ll best

align

ed as

a pla

intiff

when

the “

actua

l ad

versit

y of in

terest

” pitt

ed th

e inte

rveno

r aga

inst t

he or

igina

l defe

ndan

ts).

7

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divers

ity ju

risdic

tion o

ver t

he G

eisler

Unit

claim

s. Fi

rst, o

rigina

l juris

dictio

n

unde

r § 1

332

was d

estroy

ed b

ecaus

e the

part

ies w

ere n

o lon

ger d

iverse

speci

ficall

y, Ha

rleton

(plai

ntiff)

and B

uffco

and F

reema

n (de

fenda

nts) a

re all

citize

ns of

Texa

s. Se

eExxo

n Mob

il Corp

. v. A

llapa

ttah S

ervs.,

Inc., 5

45 U

.S.

546,

553 (

2005

) (“In

a cas

e with

mult

iple p

lainti

ffs an

d mult

iple d

efend

ants,

the pr

esenc

e in t

he ac

tion o

f a si

ngle

plaint

iff fro

m the

same

State

as a

single

defen

dant

depri

ves t

he di

strict

cour

t of o

rigina

l dive

rsity

jurisd

iction

over

the

entir

e acti

on.”).

Secon

d,§1

367(a

)’s su

pplem

ental

subje

ct-ma

tter j

urisd

iction

provis

iondo

esno

taffo

rdjur

isdict

ion ov

er the

Geis

ler U

nit cl

aims b

ecaus

e

Harle

ton’s

parti

cipati

on as

a pla

intiff-

interv

enor

would

be in

consis

tent w

ith

the re

quire

ments

of §

1332

. See

§ 136

7(b);s

ee als

oGrif

fin, 6

21 F.

3d at

386–

87

(“[W]

hile C

ongre

ss cod

ified t

he co

ncep

ts of

pend

ent a

nd an

cillar

y jur

isdict

ion

in § 1

367(a

), it a

ppare

ntly c

hose

to cir

cums

cribe

such

juris

dictio

n in §

1367

(b)

with

respe

ct to

plaint

iff int

erven

ors.”).

There

fore,

becau

se the

re wa

s no s

ubjec

t-matt

er jur

isdict

ion ov

er the

parti

es’ G

eisler

Unit

claim

sfoll

owing

Harl

eton’s

inter

venti

on, w

e mus

t vaca

te

the gr

ant o

f sum

mary

judgm

ent w

ith re

spect

to th

e Geis

ler U

nit cl

aims.

We

reman

d the

se cla

ims t

o allo

w the

distr

ict co

urt t

o con

sider

in the

first

instan

ce

wheth

er Ha

rleton

is an

indis

pens

able

party

such

that

dismi

ssal o

f the

entir

e

action

conc

erning

the G

eisler

Unit

is re

quire

d. Se

eBrow

n v. P

ac. Li

fe In

s. Co.,

462 F

.3d 38

4, 39

3–94

(5th

Cir.

2006

) (“If

a pe

rson w

ho qu

alifie

s und

er Ru

le

19(a)

cann

ot be

mad

e a p

arty b

ecaus

e, for

exam

ple, j

oinde

r wou

ld de

stroy

subje

ct-ma

tter

jurisd

iction

, a fe

deral

cou

rt mu

st de

termi

ne w

hethe

r tha

t

perso

n is ‘i

ndisp

ensab

le.’”).

III.B

owen

, Hem

by, a

nd Yo

w Un

itsCl

aims

We tu

rn n

ext t

othe

dist

rict c

ourt’

s den

ial of

relie

f on

Freem

an a

nd

Freem

an Ca

pital’

s cou

ntercl

aimsw

ith re

spect

to th

e Bow

en, H

emby

, and

Yow

8

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58

Units

.7 Free

man a

nd Fr

eeman

Capit

al ack

nowl

edge

on ap

peal

that t

hey h

ave

waive

d any

argu

ment

concer

ning t

he m

erits

of the

distr

ict co

urt’s

decis

ion,

arguin

g ins

tead

that t

heBo

wen,

Hemb

y, an

d Yo

w Un

its a

re com

pulso

ry-

counte

rclaim

s tha

t mus

t be d

ismiss

ed be

cause

subje

ct-ma

tter j

urisd

iction

is

lackin

g with

resp

ectto

the G

eisler

Unit

claim

s.

When

an

indep

ende

nt ba

sis fo

r jur

isdict

ion ex

ists w

ith re

spect

to a

counte

rclaim

,a fe

deral

cour

t may

adjud

icate

the cl

aim ev

en if

the o

rigina

l

claim

was

dismi

ssed f

or lac

k of s

ubjec

t-matt

er jur

isdict

ion.

McLa

ughli

n v.

Miss.

Powe

r Co.,

376 F

.3d 34

4, 35

5 (5th

Cir.

2004

); see

alsoK

uehn

e & N

agel

(AG

& Co

) v. G

eosou

rce, In

c., 87

4 F.2d

283,

291 (

5th Ci

r. 198

9);8 6

CHAR

LES A

.

WRIG

HT,A

RTHU

R R.

MILL

ER,&

MARY

KAY

KAN

E,FE

DERA

L PR

ACTI

CE A

ND

PROC

EDUR

E § 14

14, a

t 130

(3ded

. 201

0)(“I

f the c

ounte

rclaim

does

presen

t an

indep

ende

nt ba

sis of

fede

ral ju

risdic

tion,

howe

ver, t

he co

urt m

ay ad

judica

te it

as if i

t were

an or

igina

l clai

m de

spite

the d

ismiss

al of

plaint

iff’s c

laim.

”).

7No

tably,

Harl

eton d

id no

t asse

rt an

yinte

rest in

or cla

im in

volvi

ng th

ese un

its, n

or ha

s any

party

sugg

ested

that

Harle

ton is

an in

dispe

nsab

le pa

rty wi

th res

pect

to the

secla

ims.

There

fore,

our a

nalys

is of

Harle

ton’s

interv

entio

n ha

s no e

ffect

on ou

r con

sidera

tion

of Fr

eeman

and F

reema

n Cap

ital’s

claim

sreg

arding

the B

owen

, Hem

by, a

nd Yo

w Un

its.

8Fr

eeman

and F

reema

n Cap

ital u

rge th

at we

not r

ely on

Kue

hne,

arguin

g tha

t it

conflic

ts wi

th ou

r earl

ier-de

cided

opini

on in

City

of Ho

uston

v. St

anda

rd-Tr

iumph

Moto

r Co.,

347 F

.2d 19

4 (5th

Cir.

1965

). Ho

wever

,Kue

hne d

oes no

t con

flict w

ith an

d ind

eed ci

tes to

Stand

ard-Tr

iumph

Moto

r, am

ong o

ther c

ases,

for th

e prop

ositio

n tha

t a co

unter

claim

need

no

t be d

ismiss

ed wh

en su

pport

ed by

an in

depe

nden

t grou

nd fo

r juris

dictio

n. Se

eKue

hne, 8

74

F.2d a

t 291

. Even

if the

y did

conflic

twith

resp

ect to

whe

ther a

coun

tercla

im ca

n proc

eed

when

supp

orted

by an

inde

pend

ent b

asis f

or jur

isdict

ion, o

ur ru

le of

orderl

iness

requir

es us

to

follow

the e

arlier

-decid

ed ca

se of

Haber

man

v. Eq

uitab

le Lif

e Assu

rance

Socie

ty of

the

Unite

dStat

es, 22

4 F.2d

401 (

5th C

ir. 19

55), w

here

we he

ld tha

t a co

mpuls

ory co

unter

claim

cou

ld pro

ceed t

o a fin

al jud

gmen

t on t

he m

erits,

even

if the

cour

t lacke

d jur

isdict

ion ov

er the

pri

mary

claim

, beca

use d

iversi

ty jur

isdict

ion su

pport

ed th

e cou

ntercl

aim. S

ee22

4 F.2d

at40

9 (“[E

]ven i

f the

comp

laint

be di

smiss

ed, a

comp

ulsory

coun

tercla

im is

not r

equir

ed to

be

dismi

ssed w

here

it is s

uppo

rted b

y a pr

oper

groun

d of fe

deral

juris

dictio

n.”); s

ee als

oUnit

ed

States

v. W

heele

r, 322

F.3d

823,

828 n

.1 (5t

h Cir.

2003

) (exp

lainin

g tha

t whe

n “tw

o prev

ious

holdi

ngs o

r line

s of p

reced

ent c

onflic

t, the

earl

ier o

pinion

contr

ols a

nd is

the

bindin

g pre

ceden

t in th

e circ

uit” (c

itatio

n and

inter

nal q

uotat

ion m

arks o

mitte

d)).

9

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Here,

an

indep

ende

nt ba

sis fo

r sub

ject-m

atter

jurisd

iction

based

on

§133

2exis

ts for

the Bo

wen,

Hemb

y, an

d Yow

Unit

sclai

ms.T

he pa

rties

were

comple

tely d

iverse

as F

reema

n and

Free

man C

apita

l were

citiz

ens o

f Tex

as

and C

hesap

eake

was a

citize

n of O

klaho

ma. H

arleto

n did

not d

estroy

dive

rsity

with

respe

ct to

these

claim

s beca

use i

ts cla

ims w

ere lim

ited t

o the

Geisl

er Un

it.

Furth

er, th

e amo

unt i

n con

trove

rsy w

ith re

spect

to th

esecla

imse

xceed

ed

$75,0

00.T

heref

ore, b

ecaus

e Free

man a

nd Fr

eeman

Cap

ital’s

only

chall

enge

on ap

peal

rests

on th

eir ju

risdic

tiona

l argu

ment,

we a

ffirm

the di

strict

cour

t’s

decis

ioncon

cernin

gthe

Bowe

n, He

mby,

and Y

ow U

nits.

IV.C

onclu

sion

We V

ACAT

E an

d RE

MAND

the

distri

ct cou

rt’s s

umma

ry jud

gmen

t

decis

ion w

ith re

spect

to th

e Geis

ler U

nit cl

aimsa

nd A

FFIR

M the

cour

t’s

decis

ion w

ith re

spect

to th

e Bow

en, H

emby

, and

Yow

Units

claim

s.

10

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12, 2

014

PO

WD

ER

RIV

ER

BA

SIN

RE

SO

UR

CE

CO

UN

CIL

v.W

YO

OIL

&G

AS

CO

MM

ISS

ION

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